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Is there life beyond the bear? While crypto Twitter and mainstream media are expressing varying levels of hope and skepticism, a lot of teams are working hard to bring the future of Web3 closer. And this time — it’s not only crypto, folks.
This is the main difference between this “crypto winter” and the one of 2018-2020, when Ethereum was available for less than 200 dollars. Drastic decreases in prices and market capitalization caused a lot of debates on the legitimacy of the industry from traditional outsiders but couldn’t scare off the Web3-native believers who just continued building. Whether it’s because of the precedent they set or anticipation of the bigger market, traditional players doubled down on the bear builder party this time.
NFTs to lead the way
The spotlight here is once again on NFTs. Not intimidated by the market conditions, quite a few future-oriented brands have been releasing pilot NFT projects to test the waters (McFarlane, Fox, Starbucks) or working on robust digital asset-based community campaigns behind closed doors. It’s obvious to anybody that it’s not a race for quick gain, but a well-thought-out long-term game.
“Why now?” you’re probably wondering. First and foremost, the technology, UX and education frameworks have finally reached the level that significantly lowers the entry barrier to the NFT ecosystem. Arguably, for the first time ever, Web3 is close to being ready to onboard millions of mass users.
“How does it look in practice?” you might ask. Loyalty programs, community engagements and unlockable content are among the brands’ favorites. Big companies are starting to consider NFTs as a base for a variety of activities, giving an inspiring hint at what the next bull run can look like.
Such a spike in credibility and the prospects of mass adoption can’t 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 different levels of decentralization where users can mint (create), display, buy and sell their collectibles. For quite a few brands, these marketplaces have been the entry point into the NFT world.
With this trend clearly unfolding, we can’t but ask ourselves: What role will NFT marketplaces play in this big movement? Will they stay the same or evolve to boost mass adoption in collaboration with brands?
Rethinking NFT marketplaces
What is the first thing that comes to mind when you think about an online marketplace? Quite likely, the likes of Amazon will be there: a one-stop-shop environment where users can find literally anything they want. Offered goods vary in price, but one thing stays the same: High-end brands have very limited representation there. You might find an expensive perfume or a pair of glasses, but that’s about it. And who would go shop for Chanel bags on Amazon anyway?
This analogy is key to understanding the brand’s strategy as they come into Web3 with their massive user bases. Does this traditional marketplace model appeal to brands? I’d argue not. Since NFTs are shaping up to power next-gen gamified loyalty programs for communities, one-size-fits-all does not look like a good match.
Brands dipping their toes into NFT are looking to offer a safe, uniquely branded experience for their customers — with controllable monetization on top.
Adoption issues and solutions
When directing users to a third-party NFT marketplace, there are several problems a brand can encounter:
Safety and IP protection: Unfortunately, there are malicious players on the market, and NFT marketplaces do not always do a timely job eliminating collection copycats to make sure that a new user does not purchase a wrong NFT by accident.
Monetization: With the recent market development and “race to the bottom,” the trend moves towards not respecting creator royalties, which could serve as a major revenue stream for popular collections. On top of that, using a third-party NFT marketplace always means paying fees that can be changed at any point of time. In other words, not controlling your revenue stream fully.
This is where the Shopify model is entering the scene. Unlike traditional Web2 marketplaces, NFT marketplaces can take different forms — and verticalized, custom community marketplaces are a very promising route.
Creating and fully controlling its own community marketplace allows a brand to 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.
On top of that, NFT community marketplaces can be powered by shared orderbooks, meaning that buy and sell orders can be aggregated from other marketplaces from the start to help bootstrap the liquidity.
All that said, on-brand community NFT marketplaces can truly become the gateway to onboard the next mass wave of users to crypto in a safer and more accessible way. Will this be the case in the next bull run? Time will tell.
Related: Why Community Is Key in Web 3.0