Written by: Myles O'Bery
Compiled by: TechFlow
There’s always so much innovation and experimentation happening in Web3 that it’s almost impossible to keep up.
But if you zoom out, there are six major Web3 concepts in 2023 that builders and creators must pay attention to. To understand these concepts, we invited Amanda Cassatt, who brought Ethereum to market as CMO of ConsenSys and is now the founder and CEO of Serotonin, a leading Web3 marketing agency, to explain them to us.
Here’s what we’re going to break down today:
NFTs and their future adoption;
Communities and the role they play in Web3;
how marketing is changing in this space;
Web3 society and the creator economy;
Experimentation and adoption of the Metaverse;
DAOs and their implementation.
NFTs and their future adoption
We always say that NFTs are just technology. They’re just a wrapper, a vehicle, not an end result. In fact, Amanda likes to refer to them as a substrate that people can shape to suit their needs, and we couldn’t agree more.
Now that the speculative frenzy of 2021 is over, we’re starting to see more real uses for NFTs beyond art and digital collectibles.
One of the use cases that is becoming increasingly popular right now is membership and loyalty programs.
We saw Starbucks recently launch a beta of their Web3 rewards program — which will be one of the biggest Web3 onboarding tutorials of 2023 if they are successful.
But why put loyalty points on-chain?
Currently, loyalty programs are pretty boring. They give you points based on your spending, and you can redeem those points for vouchers, items, discounts, etc., but that's it.
However, if we use Web3 technology, it can unlock so much more. Businesses can now also offer digital items and experiences to members, which is not only cost-effective for the company, but also provides users with more choices.
On top of that, it also allows participants to easily sell their points, as NFTs (or fungible tokens) can be exchanged peer-to-peer or through marketplaces. This is a huge value unlock for people who never use their points.
At this point, being able to freely sell loyalty points or memberships is one of the biggest benefits of using NFTs for consumers and businesses.
From the consumer’s perspective, they will become more willing to spend more on memberships because they will be able to get back at least some of the money they spent.
For example, BAYC recently launched an NFT series called Sewer Passes, which is an activation ticket to participate in the game. If I want to participate, I can buy a BAYC (which is my community membership), claim my free Sewer Passes, and then sell my BAYC.
If put on the chain, the thousands of exclusive, expensive memberships currently available could do the same.
Putting loyalty programs and memberships on-chain also means that companies must prepare for subsequent restrictions on storing identity data. Companies will still have wallet addresses through which purchases can be tracked, but, unlike using advertising platform data, it will not be tied to identity.
But even if companies don’t have access to in-depth user data, they do have access to thousands of other data points. This is because anyone can view a wallet’s transaction history, which means you can “spy” on how your community (or potential customers) interact with your competitors, and even target your competitors’ customers with marketing campaigns.
And, since this data is accessible as long as it is stored on the blockchain, you will be able to retarget their existing customers permanently.
In addition to this, since the data is stored on-chain, you won’t have to store all of this data yourself, making it easier to manage, more accurate, and making your company less vulnerable to hacker attacks. This also means that you are free to transform traditional computer systems without losing valuable customer data.
Community and its role in Web3
Community is a word we all tend to use a lot in web3. Some people think it’s just a buzzword, but Amanda believes it refers to something very specific — the fusion of investors, users, and teams into one unified category, community.
But why focus on community instead of building like a Web2 company?
In Web2, consumers were kept at arm’s length from your business. However, by building with a Web3 mindset, you can bring your audience into your development process, ultimately helping you create better products and experiences.
Participating in the community can also act as a part-time employee, helping you scale your company with minimal additional overhead.
For example, you can lean on your community to support your marketing efforts, audit your smart contract code, or simply ask them for feedback. Sometimes this happens naturally as people interact with your project, but it never hurts to have a plan in place to encourage community involvement.
This is a very different approach compared to traditional Web2 strategies, which arbitrage CAC (customer acquisition cost) and LTV (lifetime value) through third-party platforms.
In Web2, once you stop paying for it, the traffic dies. But with a community-first approach, your business can continue to grow because Web3 technology has the ability to align incentives for long-term stakeholders.
The key though is to build your community in a sustainable way, which means no big airdrops!
At Serotonin, Amanda and her team like to think of community building as a group of aliens visiting Earth in a spaceship (your company or project). Once they arrive, they drop a ladder wherever they are and invite some humans (your community) aboard.
The only problem now is that the aliens and humans are getting too close! So you have to handle these very carefully.
So you want to be very careful about where you land your "ship" and who you let into your community in the early stages, as this will set the tone for what's to come.
If you need people who are motivated to help you build, you need people who believe in your vision, not people who want to make a quick buck from an airdrop or whitelisting.
For example, if you’re building an NFT project, you could look for early members who are interested in the token’s art style or the artists themselves.
This is crucial because eventually, your community will grow larger than you can handle alone, so it needs a solid foundation to sustain it.
But where should you place your community’s home base?
Now, there is one platform that stands out above the rest and that is Discord.
In addition to the fact that many early cryptocurrency and Web3 adopters were already using the platform due to their background, Discord integrated Web3 features (such as token on-ramps) earlier than other platforms.
This combination makes Discord the go-to community platform for everyone in the industry. Amanda does see a lot of communities on Telegram as well, as well as several new web3 native communication platforms currently being built.
So, only time will tell if Discord becomes the de facto Web3 home for most projects in the future, but for now it’s one of the best options we have.
Why Marketing in Web3 is Changing
As she was previously the CMO of ConsenSys and is now the founder and CEO of a leading Web3 marketing agency and product studio, it’s safe to say Amanda knows a thing or two about marketing in this space.
Here’s what she had to say about Web3 marketing:
Web3 is changing the way we build marketing systems. For example, in Web2, marketing was a bunch of activities done by a centralized marketing function, such as paying other platforms (i.e. Facebook) to serve ads to potential customers.
In contrast, Web3 allows us to design a self-marketing system. So even before you build any community, even before you decide on your name, it’s about designing an incentive system using Web3 tools.
This system will give people both extrinsic and intrinsic motivation in the long term to help you build your project.
To reiterate, airdrops should not be the main component of your Web3 marketing system. Just like in Web2, you have to find product-market fit. You need to be able to clearly define why your product is beneficial and share that knowledge with the right people.
You have to understand what problem you are solving, who needs to solve it, and how much they are willing to spend to solve it. Without this knowledge, using Web3 technology is just a short-term marketing gimmick.
Tokens are not a product for a business, they are just a tool to help you amplify your product or business. They can help you provide more utility to your product or business, but they are not the product itself.
Creator Economy and Web3 Social
One of Web3’s biggest innovations is that it gives creators and users power and ownership over their network identities.
With an on-chain social graph like Lens Protocol, you will be able to port your content, reputation, and audience across platforms instead of being owned by Facebook or Twitter.
Amanda believes that 2023 may well be the year of Web3 social, because if analysts are right, crypto prices could be flat for most of 2023. Remember, we are experiencing some bullish action now, but that doesn't mean the bull market is back! What we need is more opportunities.
So if the market continues to consolidate, it means there is less interest in speculation, which means people have more time to experiment with Web3 social and build their new online identities.
But it’s also important to note that we’re still refining the user experience of these platforms. Lens and other protocols and dApps still have a ton of new features to ship, as well as bugs to fix, before they’re available to the public.
Amanda believes we’ll see platforms with small, dedicated communities come to the fore because they have consistent engagement that can be used to grow the platform organically.
But once we have these thriving niche communities, how do we get the masses to join?
For creators, they realize they have no control over their communities and content, so they move on to broader areas.
Kyle experienced this when his Facebook account (which he used to run his business) was deleted for no apparent reason, which is why he is so bullish on Web3.
But for the general public, evolution always happens when new alternatives emerge. Before TikTok, people thought Facebook, Instagram, and Twitter would be the main platforms in this field.
Overall, we think it will be a gradual migration to Web3 social, starting with creators experimenting on these platforms and convincing their Web2 audiences to join them, slowly bringing more users and creators into the space.
Metaverse as the first stop for Web3 beginners
We all know the Metaverse is coming. In fact, it’s the part of Web3 that most Web2 people are interested in. A recent Capgemini report states that over 90% of consumers are interested in the Metaverse and the interactions these digital worlds can facilitate.
In particular, most consumers are excited about interacting with friends and family, followed by connecting with co-workers, gaming-related experiences, and finally business activities.
While people are enthusiastic about the Metaverse, Amanda believes their success will depend on supply and demand. This depends on whether a business’s product fits the digital experience and whether its target customers are active in the Metaverse.
For example, retail shopping makes perfect sense in the Metaverse. When people go to a mall, they happily walk around, look at clothes, and try them on. This can also be done in the Metaverse with a greater selection of stores due to the lack of physical boundaries.
Amanda even thinks that the Metaverse could become our go-to social gathering place in the future, similar to how people hung out in malls in the 90s.
As people buy and develop LAND, the Metaverse can attract more people, leading to more development and a wider range of products and services in the digital world. More music events, cool venues, brand sponsorships, shops, and more, and we are still in the early days of this evolution.
But the point is that the Metaverse allows companies to more easily participate in its community.
For example, Amanda helped the famous art auction house Sotheby’s build a replica of its New York auction house in Decentraland.
In this replica, people can watch the live auction, which is important because not everyone can attend (or is suitable for) the real location. Sotheby’s has also started accepting bids in ETH, encouraging Web3 natives to get involved.
Therefore, the Metaverse can not only provide your audience with a unique experience, but it can also greatly increase your impact.
DAOs and their adoption
DAOs were another hot topic last year, promising that they would revolutionize the way companies and projects are governed.
Some DAOs have been wildly successful, while others have been lackluster. But it’s important to remember that, like NFTs and other Web3 innovations, DAOs are just another tool for builders and creators to shape to their needs.
This means that in the real world, the implementation of a DAO can look very different between different companies.
For example, many DAOs assign voting rights based on how much an entity has invested in a project. Two prominent examples are Flamingo DAO and Pleasr DAO, which pool members’ funds and help them collectively decide what to subsequently buy or sell.
Other projects, like Maker, use specific governance tokens that enable holders to vote on different protocol decisions.
In general, DAOs are great for making these types of governance decisions because you can immediately access the market without having to form a formal investment vehicle.
For example, renowned Web3 legal scholar Aaron Wright created the LAO Framework, which DAOs can follow to ensure they can easily establish the necessary relevant legal entities.
But one problem with DAOs is when they use the wrong governance model for a project, such as using investment-based governance allocations for a software company. Unless the lead investors are software entrepreneurs themselves, it doesn’t make sense to let them shape the future of the company.
So the key here is to shape the DAO structure and governance model to fit your company.
For example, you could have a DAO where people invest but only one person makes all the decisions. Or it could look like a traditional corporation or LLC, where the DAO has the power to hire or fire company leaders to ensure they act in line with everyone.
Large companies could even use DAOs for sectors where it makes sense, such as within the charitable arm of the organization.
Overall, Amanda believes DAOs will be used where they are needed most, such as where they can improve speed to market, decision making, or transparency.
Prepare for and reap the rewards of the next adoption cycle
During the first wave of the internet, many big brands missed the initial adoption cycle, leading to many of them being disrupted by web-native companies.
So while we’re still in the early days, many companies are learning from their mistakes and making sure they’re ready for the coming wave of adoption — and it’s a huge wave.
In fact, the adoption of Web3 technologies, especially NFTs, has been extremely high in recent years. Amanda shared that when Jeff Bezos first started Amazon, network usage was growing at about 2,000% per year. But in 2021, NFT adoption has grown by a staggering 21,000%!
And that’s what smart brands are focusing on, the adoption rate rather than the current size of the pie.
It’s no surprise, then, that savvy companies like Starbucks, Reddit, Nike, and more are experimenting with Web3 at an increasingly large scale.
Every company will be a Web3 company, it’s just a matter of who gets there first. See whose lunch gets eaten because they’re late.
