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Is there life beyond the bear? While crypto Twitter and mainstream media are expressing varying levels of hope and skepticism, many teams are working hard to bring Web3’s future closer. And this time – it’s not just crypto, folks.
This is the main difference between this “crypto winter” and that of 2018-2020, when Ethereum was available for less than $200. Drastic price drops and market capitalization sparked many debates about the legitimacy of the industry from traditional outsiders, but failed to deter the Web3 native believers who just kept building. Whether it’s because of the precedent they’ve set or anticipation of the larger market, traditional players doubled down on the bear builder’s party this time around.
Related: How Crypto, Blockchain and Web3 Institutions Can Accelerate Mass Adoption
NFTs to lead the way
The spotlight is once again on NFTs here. Unintimidated by market conditions, quite a few forward-thinking brands have released pilot NFT projects to test the waters (McFarlane, Fox, Starbucks) or are working behind closed doors on robust digital asset-based community campaigns. It is clear to everyone that it is not a race for quick profit, but a well-thought-out game for the long term.
“Whi now?” you probably ask. First and foremost, the technology, UX, and education frameworks have finally reached the level that significantly lowers the barrier to entry into the NFT ecosystem. No doubt, for the very first time, Web3 is almost ready to onboard millions of mass users.
“What does it look like in practice?” you may wonder. Loyalty programs, community engagements and unlockable content are among the favorites of the brands. Major companies are beginning to view NFTs as a foundation for a variety of activities, providing an inspiring hint as to what the next bull run may look like.
Such a credibility spike and the prospects of mass adoption cannot help influence the current shape of the industry and the trajectory of its development. To date, the heart of the Web3 movement has been NFT marketplaces – platforms with varying levels of decentralization where users can store (create), display, buy and sell their collectibles. For quite a few brands, these marketplaces have been the entry point to the NFT world.
With this trend clearly unfolding, we can’t help but wonder: what role will NFT marketplaces play in this major move? Will they stay the same or evolve to drive mass adoption in collaboration with brands?
Related: Make your brand a household name with the power of NFTs
Rethinking NFT Marketplaces
What is the first thing that comes to mind when you think of an online marketplace? Very likely there will be the likes of Amazon: a one-stop-shop environment where users can find literally anything they want. Goods offered vary in price, but one thing remains the same: high-end brands have very limited representation there. You might find an expensive perfume or glasses, but that’s about it. And who would actually go shopping on Amazon for Chanel bags?
This analogy is key to understanding the brand’s strategy when they come into Web3 with their huge user base. Does this traditional marketplace model appeal to brands? I would argue not. As NFTs gear up to enable next-gen gamified community loyalty programs, one-size-fits-all doesn’t seem like a good fit.
Brands that dip their toes in NFT want to provide their customers with a safe, unique brand experience – with manageable revenue on top.
Adoption problems and solutions
When users are directed to a third-party NFT marketplace, there are several issues a brand may encounter:
Security and IP protection: Unfortunately, there are malicious players in the market, and NFT marketplaces don’t always work to eliminate collection copycats in a timely manner to ensure that a new user doesn’t accidentally purchase a wrong NFT.
Generate income: With the recent market development and “race to the bottom”, the trend is shifting towards disrespecting creator royalties, which could serve as a major revenue stream for popular collections. In addition, using a third-party NFT marketplace always means paying fees that are subject to change at any time. In other words, not completely controlling your income stream.
This is where the Shopify model enters the scene. Unlike traditional Web2 marketplaces, NFT marketplaces can take a variety of forms – and vertical, custom community marketplaces are a promising route.
By creating and fully controlling its own community marketplace, a brand can enforce royalties, set custom fees, and ensure the proven authenticity of digital collectibles with a branded look and feel, all in the spirit of decentralization.
In addition, NFT community marketplaces can be powered by shared order books, meaning buy and sell orders from other marketplaces can be merged from scratch to kick-start liquidity.
That said, on-brand community NFT marketplaces can truly become the gateway to onboarding the next massive wave of users to crypto in a more secure and accessible way. Will this be the case in the next bull run? Time will tell.
Related: Why community is key in Web 3.0