The Open Protocol Thesis

Every major technological revolution in human history has followed the same pattern. A new capability emerges. Closed systems capture it first. Then open standards arrive and render the closed systems obsolete. This pattern is not accidental. It is structural. And it is playing out again right now.

In the 1970s, networking was proprietary. IBM’s SNA, Digital’s DECnet, Xerox’s XNS — each corporation built its own walled garden. They were technically sophisticated. They worked. And they lost. TCP/IP, an open protocol nobody owned, became the foundation of the internet. Not because it was technically superior in every dimension, but because it was permissionless. Anyone could build on it. And so everyone did.

The same arc repeated with operating systems. Proprietary Unix variants dominated enterprise computing until Linux — open, free, modifiable by anyone — became the backbone of cloud infrastructure. Today, Linux runs the overwhelming majority of the world’s servers, powers every Android device, and underlies most of the cloud. The proprietary alternatives still exist, but they are niche.

Why Open Wins

The superiority of open protocols is not ideological. It is economic. Open systems benefit from three structural advantages that closed systems cannot replicate.

First, open protocols eliminate permission barriers. When anyone can build on a protocol without asking, innovation compounds without gatekeepers. TCP/IP did not need a business development team. HTTP did not require partnership agreements. They grew because they were available to everyone, unconditionally.

Second, open protocols align incentives across the entire ecosystem rather than extracting value toward a single entity. In a closed system, every participant is ultimately a customer. In an open protocol, every participant is a stakeholder. This distinction matters enormously at scale. When a protocol grows, everyone who builds on it benefits. When a platform grows, the platform benefits and adjusts terms accordingly.

Third, open protocols are antifragile. They improve under stress because the entire community has both the ability and the incentive to fix problems. Closed systems have a single point of failure — the company behind them. If that company makes a bad decision, pivots strategy, or goes bankrupt, everyone built on top of it suffers. Open protocols survive the failure of any single participant.

The Web3 Parallel

We are watching this pattern unfold again, this time across finance, data, computation, and intelligence. The incumbents are the same kind of closed systems that lost before: centralized platforms that control access, extract rent, and impose terms unilaterally.

The challengers are open, public, permissionless protocols. Bitcoin replaced trusted intermediaries with a protocol for value transfer. Ethereum replaced centralized compute platforms with a protocol for programmable coordination. Chainlink replaced proprietary data feeds with a protocol for verifiable information. Each of these is doing to its respective domain what TCP/IP did to networking.

The key insight is that these are not applications. They are infrastructure. They are the foundational layers on which applications are built. And just like TCP/IP, HTTP, and SMTP, they will outlast the applications that run on top of them.

The Investment Implication

If you accept that open protocols structurally outcompete closed systems over time, the investment thesis becomes clear: identify the protocols that will define their categories, take meaningful positions, and hold through the volatility.

This is exactly what we do. We do not chase applications or trends. We identify the infrastructure protocols that are becoming the invisible backbone of a new internet — and we hold them with conviction.

The early internet made this obvious in retrospect. Everyone remembers the applications that failed — Pets.com, Webvan, GeoCities. Fewer remember that TCP/IP, HTTP, and SMTP quietly became the most valuable infrastructure ever created. Not because they were exciting, but because they were essential.

The same will be true of this era. Most applications will fail. The protocols will endure. We invest accordingly.