We've all been there. You're working on a new website, an app, a DAO, or some other project.
At first, accounting is the last thing on your mind. You're thinking about the product, the technology, the user experience.
But then you realize that you need to track money somehow. So you open up a spreadsheet and start tracking expenses. This is Web2 thinking. You're using old tools to do new things. You're making do with what you have.
Why the Old Way is Broken
The idea of the Rube Goldberg machine is often used to describe something that's needlessly complex. It's a machine that performs a simple task in a complicated way.
The spreadsheet is the Rube Goldberg machine of blockchain accounting. It's a complicated way to track simple data.
Part of the problem is that spreadsheets were designed for a different era. They were designed for an era when data was small, centralized, and static.
Blockchain data is none of those things. It's large, distributed, and dynamic. A spreadsheet can't handle that kind of data.
But the bigger problem is that a spreadsheet can't handle decentralized data. With a spreadsheet, you have to trust that the person who entered the data into the spreadsheet didn't make any mistakes.
With blockchain, there is no single person who controls the data. The data is spread out across many computers, and each computer has its own copy of the data. This is called a distributed ledger.
With a distributed ledger, you don't have to trust any one person. You can trust the network.
Use Web3 Tools For Web3 Projects
If you're running a blockchain-based project, web3 thinking says you should use a tool designed for the new paradigm. You should use a tool that is decentralized, that cuts out the middleman, and that is built on trustless principles.
In other words, you should use a tool like Bulla Network. Bulla Network is a decentralized accounting tool that’s designed to manage the finances of DAOs, DeFi apps, metaverses, and other web3 projects.
With Bulla Network, there is no need for spreadsheets or other centralized accounting tools. Everything is stored on the blockchain, so it's secure, transparent, and auditable.
Plus, Bulla Network is integrated with popular wallets like MetaMask and Gnosis Safe, so it's easy to use.
4 Places Web3 Tools Can Replace Spreadsheets
Many blockchain-based projects involve a complex medley of interactions between different platforms, wallets, and smart contracts. This can quickly become overwhelming and difficult to track using a centralized accounting tool like a spreadsheet.
Let's look at 4 ways web3 tools can replace your old spreadsheets.
1. DAOs
While the broader crypto market has suffered a hard and fast crash, DAO treasuries have grown by nearly a billion dollars this year.
Projects like Uniswap, Bitdao, ENS, and Gnosis make up the largest portion of these DAO funds. Uniswap is the most successful decentralized exchange, and unlike Coinbase or Binance, it doesn't have centralized points of control or management. All funds are held in a smart contract and governance is handled by the community through the UNI token.
As EtherScan shows, there are over 320,000 addresses holding UNI, with millions of transfers recorded on the Ethereum blockchain. This degree of decentralization and community involvement would be very difficult (if not impossible) to record using centralized spreadsheets.
The DAOs themselves have payroll to manage, too. Adding to the complexity, many projects like Uniswap also have multiple tokens involved in their ecosystem - UNI, ETH, and often a variety of ERC20 tokens that are traded on the platform. To get an accurate view of your project's financials, you need a tool that can track all these interactions in real-time.
2. DeFi Apps
Uniswap, while complex, is still a relatively simple DeFi app when compared to Maker or Compound.
Maker is a decentralized lending platform that allows users to lock up their crypto assets as collateral and borrow Dai, a stablecoin. Unlike a centralized lending platform like BlockFi, there is no middleman taking a cut of the interest payments. Instead, Maker uses smart contracts to handle all the financial interactions between borrowers and lenders.
Compounding this complexity is the fact that Maker also has its own token, MKR. MKR holders can vote on governance proposals to change the protocol, and they also receive a portion of the interest payments made by borrowers.
In short, millions of users, multiple tokens, and a complex web of financial interactions - all happening on the blockchain. Once again, centralized spreadsheets are not up to the task.
3. Metaverses
The "metaverse," coined by Neal Stephenson in his novel Snow Crash, is a shared virtual world where users can interact with each other and with digital objects.
The most well-known pre-blockchain metaverse is probably Second Life, which has been around since 2003. Today, there are many metaverses built on the blockchain, including Decentraland, Cryptovoxels, Somnium Space, and many more.
These metaverses are often compared to video games like World of Warcraft or Fortnite, but they are much more than that. They are entire virtual economies, with their own currencies, real estate, and businesses.
And just like the real world, these metaverses need accounting tools to track all the financial activity taking place within them. Once again, payroll, virtual real estate, in-game purchases - all these need to be tracked and accounted for.
4. NFT projects
Creating an NFT project means hiring designers, artists, and other creative professionals to create the digital assets that will be minted as NFTs. Typically, projects also hire Web3 engineers to build the minting platform and front-end experience.
And, of course, NFT projects need to pay their employees. That's where web3 accounting tools come in.
With a tool like Bulla Network, you can track all the financial activity related to your NFT project in one place. This includes employee salaries and any revenue generated from the sale of NFTs.
Takeaways
If you're running a web3 project, it's time to kill your accounting spreadsheets. Web3 accounting tools like Bulla Network are designed for the new paradigm of decentralized data and can provide decentralized payroll, accounting, and invoicing.
Schedule a free demo or join our Discord to get started.
