Six Things Companies Need to Know About Web3
Web3, a technology that is as transformative as it is disruptive, is now poised on the cusp of its Gutenberg moment. The incumbent Web2 companies are likely to bear the brunt of that change.
Blockchains promise to completely redefine ownership, cost structures, business models, value and bargaining power across a broad spectrum of the economy. Even by the standards of the fast-moving space where Web2 giants operate, the change in the variables that guide consumer behavior will be extremely rapid. If you are a product manager at a large tech company, where do you begin?
Here are six must-know elements that will help you anticipate what’s ahead:
- Identity & Wallets
In Web3, your crypto wallet often doubles as your login credentials, instead of an email address or a user name. It’s a single sign-on approach that gives the wallet owner the option to be completely anonymous and opens doors to decentralized applications (dApps) across various blockchains. Many Web3 projects start off with custodial wallets, which means they hold the user’s cryptographic keys, but most eventually transition to a non-custodial model that gives the users full control.
Wallets empower consumers to manage their digital identities, digital assets and online data in ways that are not possible in Web2. They also hand the ability to regulate access back to users, which reduces an Internet company’s capacity to leverage its network’s personal data and assets such as videos, articles, viral posts, etc. And we’ve barely scratched the surface of what wallets can do.
Read more: Venly and Shopify let businesses add non-fungible token (NFT) products to their online store fronts.
- Individual Ownership, Self Governance & DAOs
Behavioral economics is about understanding and influencing consumer decisions. Web3 projects attract consumers by incentivizing participation and distributing ownership. For example, an NFT of a blog post gives ownership to the creator, allowing for the revenue generated to be fairly distributed between the writer and the platform.
Decentralized autonomous organizations (DAOs) apply this principle to decision making. Think of a DAO as an organization with a constitution where fundamentals, principles and rules are embedded in code. The nexus of control is widely distributed among the members, instead of being monopolized by leadership. Members are rewarded in proportion to their contributions. In theory, this better aligns DAOs with the interest of its members.
Read more: How Hike pivoted from a messaging app to a play-to-earn Web3 game in a partnership with Polygon.
- Token Economics
Tokens are the lifeblood of Web3’s incentive structures. They can be used to incentivize behavior, secure the network and to reward stakeholders and users alike. While tokenomics has its limits, it is a powerful mechanism for creating trust and transparency, automating verification, ensuring compliance and reducing costs.
What all can be tokenized? Why, just about anything and everything, from likes and shares on social media to good citizenship such as recycling and donating to charity, etc. The token economy will be similar to the app economy, but exponentially larger, more diverse and offering better integration.
- Community & Loyalty
There is a lot that can be improved about how brands can connect organically to their follower base online. That’s why many fashion brands are experimenting with Web3 approaches -- starting private Discord channels, giving designers access to collaborative NFT projects and airdropping tokens.
The idea is to give designers more skin in the game and more value for fans and high net worth customers. Loyalty may soon take center stage for business objectives. Just as Web2 companies give away information to build networks, Web3 projects may give away network access to build loyalty.
Read more: Find out why Clinique is giving away NFTs.
- NFTs in Supply Chain
Supply chain applications of blockchain were among the earlier to make it on the radar for enterprises. Logistics are becoming more complex, with more third parties in the supply chain. At the same time, there are rising expectations for transparency, reliability and end-to-end visibility. Blockchain promises to resolve that tension.
- Validator Nodes
Many blockchain protocols rely on participants known as validators to secure the network by pledging tokens as collateral, a consensus mechanism known as Proof of Stake. Validator node operators are responsible for verifying the authenticity and validity of transactions within the network and are rewarded in return. Validator node as a service solutions eliminates a critical barrier to entry, making participating in blockchain network and governance that much easier.
Read more: DraftKings, a digital sports entertainment and gaming company, joins the Polygon ecosystem as a validator and node operator marking the first time a major publicly-traded firm has taken an active role in blockchain governance.
Polygon can assist Web2 companies in getting started with Web3 projects and help future proof their businesses. In addition to advice on how to design governance and tokenomics, Polygon offers access to its vast ecosystem of over 7,000 dApps, a large community of developers and extensive and frequently-updated documentation. These are just some of the reasons why enterprises like Adobe, Telefonica and Dolce Gabanna are choosing Polygon as their entrypoint to Web3.
If this sounds like something your company would be interested in, please reach out: Keep up with the latest development on our blog.
Let’s bring the world to Ethereum!