How Does ‘Forking’ a Protocol Affect Its Competitive Advantage?

Forking a protocol ▴ copying its open-source code to create a new, competing version ▴ can severely erode its competitive advantage, as it lowers the barrier to entry for competitors. The original protocol's moat is reduced unless it possesses strong network effects, a defensible brand, or significant Protocol Owned Liquidity (POL).

A successful fork can split the user base and dilute the original's value, which must be factored in as a high risk.