Sapien: A Case Study in Choosing a Public Blockchain Platform

Recent scandals involving social media have caused such a stir that some commentators have gone as far as to declare that “the internet is broken.” Blockchain startup Sapien is stepping in to try to fix some of these issues, including abysmal data privacy standards, widespread fake news, and censorship.

These issues are all extremely politically charged, and it is also why the need to decentralize social media and news, as Sapien is doing, is so sorely needed.

Sapien is using the Ethereum blockchain in conjunction with one of the most effective tokenomics models in the industry to create a decentralized platform where the community, alongside a unique, one-of-a-kind rewards structure, will curate content, rather than a centralized authority.

The reasons behind Sapien’s choice to use the Ethereum network provide a glimpse into some of the key concerns driving the movement towards public blockchains.

The First Mover Advantage

When looking at a public blockchain, the actual core source code is just one of an array of essential components. Partnerships, regulatory footwork, brand recognition and trust, and community are all pieces that play a huge role in the maintenance and expansion of a healthy blockchain ecosystem.

Trust, in particular, is a major issue in social media, and many are leaving Facebook and other platforms because they feel their trust is being violated. Facebook recently lost US$124 billion in market cap in a single day among concerns about privacy and other issues.

The interests of individuals are often at odds with the interests of large corporations like Facebook, and the Ethereum community has earned a reputation for seeking to pioneer new forms of governance that protect the rights of individuals.

Ethereum is one of the first few platforms to do this, and as a result Solidity and the Ethereum development stack are rapidly becoming the industry standard.

Sapien’s choice to build on the Ethereum blockchain means that their business model shares in the benefits of this momentum, which is quickly approaching (or has already reached) a critical mass. Ethereum looks to be doing for Web 3.0 with smart contracts and decentralized applications what TCP/IP and HTTP did for data sharing protocols on Web 1.0.

The Sapien platform works on the basis of a reputation system where users are rewarded with SPN for posting quality content, commenting and upvoting posts, and through other actions on the platform.

Besides sharing in this market position, one of the biggest advantages for the Sapien Network is the suite of tools available for developers on the Ethereum network.

Code as Law

There is a law often cited in computer science called “Conway’s Law.” In short, it states that the structure of software will reflect the structure of the team developing the software.

This is one of many reasons why Ethereum has so many developers excited.

Cryptocurrency, as the basis for software development, opens up entirely new, non-hierarchical team structures, which in turn lead to new kinds of software. New organizational structures mean that open source developers can actually make a living from their work rather than having to pursue open-source ambitions in their spare time.

With Ethereum, this has led to something of a snowball effect because the tools that have already been developed form the building blocks for subsequent generations of tools.

The variety of development tools are especially important for a complex and multi-layered application like Sapien.

This is also the reason why it is unlikely that any of the newer Ethereum competitors will be able to compete at this level any time soon. Currently, Ethereum is a rapidly expanding ecosystem of up to 250,000 developers worldwide. The EEA (Ethereum Enterprise Alliance) also consists of an impressive 500 members, up from 30 in 2017.

The environment for developers building on Ethereum has come to far outclass the competition, both in terms of quality and quantity — but why?

The Importance of Decentralization

Ethereum has several competitors that advertise superior technical performance, and yet they still have not been able to attract the same kind of open-source community (and by extension, ease of development) that characterizes Ethereum.

Understanding why Ethereum has drawn in so many talented developers requires looking at the underlying values built into the network. These same values are why the Sapien team has settled on Ethereum.

Ethereum is by far the most decentralized dapp platform in existence at the moment. Competitors with better numbers than Ethereum have achieved that performance by trading decentralization for scalability, which is off-putting for many dedicated developers.

Shift to Proof-of-Stake

With the release of Casper, Ethereum is making major strides toward shifting from Proof-of-Work to Proof-of-Stake.

The Sapien Network is also moving towards Proof-of-Stake and has already implemented their own staking system within their platform. This staking system is a core element of a decentralized system for assuring the quality of news on the Sapien platform, just as Ethereum’s Proof-of-Stake is a means of securing the integrity of data and value transmitted on the Ethereum network.

The Sapien whitepaper v1.3, released in March 2018, discusses these concerns, and the weekly updates on the Sapien blog also demonstrate that the team is consistently keeping pace with the rapid tempo of development in the blockchain space.

Scaling Issues

This leads to the major challenge facing a blockchain-based social media platform like Sapien — scalability.

In the wake of Cryptokitties, Ethereum’s scalability was in the spotlight. While Ethereum critics are taking advantage of these events, comparing Ethereum to AOL or MySpace, as some have done, is a bit farfetched.

Blockchains are protocols, not interfaces. Facebook didn’t beat out MySpace by offering better technology. They won because they provided a better user experience using the same technology.

The developer experience of Ethereum is second to none, as illustrated by the number of ICO’s being conducted on Ethereum. The end-user experience is a big part of Sapien’s focus.

Ethereum’s scaling debate is likely to be just as contentious as Bitcoin’s, but in the end, solutions like sharding or Plasma are effectively the expansion of the Ethereum ecosystem to contain more blockchains, all operating within a common framework.

Final Thoughts

Overall, Sapien’s model is one of the most promising and exciting use cases for blockchain technology. The team’s decision to develop on the Ethereum platform reflects their dedication to balance moral and ethical concerns with the practical side of technical development.

It’s not really conceivable that something could go wrong with this approach. The open-source nature and transparency of most blockchain and distributed ledger movements means that any breakthroughs in technology are likely to spread quickly throughout the entire blockchain space.

The biggest question mark is how Sapien’s user experience will adapt to increasing data volume. There is no question that the ideologically-driven crowd with the awareness of current issues will prefer Sapien, but to achieve mass adoption, they will have to compete with the user experience and familiarity of centralized platforms.

If Sapien can pull it off the payoff will be huge, and even capturing 1% of Facebook’s market cap would translate to a valuation of over US$5 billion, or $10 per SPN. However, that success would be distributed in a direct monetary way to the users of Sapien, rather than just the shareholders.

The Sapien team appears well-equipped and prepared to take on the challenge. The choice of the Ethereum blockchain means that they are not alone in facing these obstacles as they also have the full weight of the huge and talented Ethereum developer community working alongside them.

Related: Sapien Network’s Vision to Build Web 3.0: A Look at their Roadmap