How Next-Gen Entrepreneurs Leverage Web3 Business Models Using Gamefi and NFTs

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The modern Internet has made tycoons of those who are smart enough to exploit data unwittingly generated by its users. In fact, it’s created a whole new class of tech moguls — the kind of all-powerful tycoons who buy newspapers, control what we can and can’t say on social media, and more.

The recent flurry of recent Web3 protocols promises to change that. These decentralized applications (dApps) effectively aim to overhaul long-standing Web2 business models by returning control to the users who run their platforms.

Built using Distributed Ledger Technology (DLT), Web3 protocols have, in a short time, demonstrated their transformative potential by creating new modes of community management, innovative creator-centric business models, and even a parallel financial system that deals with billions of dollars. in volume every day. While it’s still possible to get extremely rich leveraging Web3, the difference is that its architecture is open, transparent, and owned by the user.

Web2 models: doomed to extinction?

Web2 is the name given to the existing iteration of the Internet – the one that Web3 seeks to supplant. At one time, Web2 was viewed with the same sense of wonder and appreciation that many now view Web3, with users touting its potential for seemingly limitless interconnectivity and information sharing. Over time however, the evolution of the Internet has drawn criticism due to the glaring power imbalance between business/government and end users.

While the first phase of the Internet (Web1) saw it function largely as a publishing platform, a clumsy extension of physical business storefronts, Web2 introduced many of the features that power today’s Internet. : search engines and referencing; blogs; file sharing; digital advertising; video streaming and podcasting; social media.

Countless companies have integrated traditional business models into the Web2 framework, building audiences using centralized databases, communicating with customers via blogs, emails and social media, and running advertising campaigns. targeted using data behemoths like Google and Facebook. Amazon is perhaps the best example of a Web2 success story: last year, the retail giant reported annual revenue of $469 billion. In addition to growing its global e-commerce business, the company has become a leader in the cloud infrastructure services market through Amazon Web Services (AWS), as well as in the video streaming market through Amazon Prime.

In the Web2 paradigm, users pay for goods and services using the legacy financial system, directly linking their bank account/credit card to individual company databases, or using third-party services such as PayPal. The vast majority of Internet users also use insecure browsers and search engines that continually harvest their data to build consumer profiles and deliver advertising content.

Gatekeepers and intermediaries were the primary beneficiaries of Web2, as users had to operate under the terms of each platform. Gavin Wood, co-founder of the Ethereum blockchain platform, summed up the intrinsic flaws of Web2 in a 2018 essay that popularized the term Web3: In place of open software protocols, our increasingly digital society will continue to being threatened by malevolent “authorities” both within society and (as in the case [of] Russian falsification of our elections) from the outside.

How Web3 Fixes the Internet Economy

According to Wood, the Goliaths at the top of the Web2 pyramid “make money from our loyalty, feed us our information, and cut us off when it doesn’t suit us.” While Web3 won’t make these Goliaths obsolete overnight, the move toward permissionless and open technologies allows the Internet’s 5 billion users to exercise self-sovereignty every step of the way.

There are many practical examples that demonstrate the usefulness of blockchain-based technologies in this regard. Consider decentralized finance (defi) as an example: these permissionless financial products allow users to save, trade, lend and borrow without visiting a bank account or giving up their identity, which if they are left on a centralized database, could make them the target of identity theft/fraud.

The emergence of NFTs and peer-to-peer marketplaces, meanwhile, allows artists and creators to connect directly with fans. Naturally, replacing middlemen with smart contracts — which automate transactions based on fixed terms — allows these artists to earn more from their work on top of that. Smart contracts can also allow creators to earn future royalty payments when their work, turned into a digital token, is sold in the secondary market.

If defi represented the first wave of Web3 protocols, gamefi (gamified finance) and NFTs certainly represent the next phase. In many ways, gamefi absorbs defi by integrating features like staking and trading into a video game environment. Thus, players can log in through Web3 wallets and earn tokens for completing missions, winning PvE and PvP battles, providing liquidity to the ecosystem, and climbing a leaderboard. In some interactive game environments, it is also possible for players to “mine”, buying and selling tokenized plots of land, tracts of virtual space on which businesses can be built.

In many ways, participants in the game to win are acting as co-owners and builders of a new kind of system, rather than mindless consumers kept in the dark about the practices of the platform itself. In this value-based economy, governance is often the purview of the players themselves through a decentralized autonomous organization (DAO). Apparently, DAOs act as community-centric administrators of a protocol; to be part of a DAO and influence the direction of the project, users simply need to hold the relevant governance token that allows them to submit proposals and vote on key decisions.

From privacy-preserving data networks and community-organized gaming guilds to NFT bazaars and blockchain-powered messaging apps, the deluge of decentralized use cases represents a viable exit ramp from Web2 and an egalitarian vision of Internet for future generations.

Metaverse Lucid Dreams

Web3 is setting the stage for a fairer and more transparent Internet, although that doesn’t mean there aren’t opportunities for entrepreneurs to generate revenue. According to Crunchbase, around $17.9 billion was invested in Web3 startups in 2021 – and nearly 50 crypto companies raised more than $100 million each.

Much of the recent discussion has focused on potential opportunities in the metaverse, large, often interconnected 3D environments where users come together to socialize, play, transact, create, and even host/attend events such as conferences. and concerts.

Web2 ambassadors like Facebook are actively exploring the metaverse, with Mark Zuckerberg describing the interactive realm as “an embodied internet that you’re in rather than just watching.” However, Web3 technologists have expressed distrust of Facebook’s plans to create a global metaverse. Yat Siu, executive chairman of metaverse startup Animoca Brands, called Facebook the biggest threat to the growth of an open metaverse because the model was “at odds with how they’ve built their business.”

Native Web3 metaverses like Alien Worlds are a different proposition to that offered by Zuckerberg and his ilk. Built primarily on the WAX ​​blockchain, but also connected to Ethereum and BNB Chain, Alien Worlds is spread across six planets and home to over seven million players, who fuel a thriving gaming economy with native Trilium Tokens (TLM) (which can be cashed in fiat). Residents of Alien Worlds can earn cryptocurrency tokens by mining, battling other players, completing missions, or in the case of landowners, hosting events on planetary lands to attract others attendees; they can also submit proposals and elect board candidates through Planet DAOs. The first metaverse release to feature 100,000, 1 million, and 5 million users, Alien Worlds is a true pioneer of play-to-win.

It’s clear that gamers with an entrepreneurial spirit can take advantage of Alien Worlds and other metaverse titles to earn a good income. But there are also opportunities for non-gamers. Consider AW Butler as an example: this airdrop service is designed to help projects run promotional campaigns that reward players for mining on their land. Token rewards for specific Alien Worlds players can increase marketing visibility for metaverse projects while inspiring brand loyalty. This is just one example of a service that can thrive within the booming metaverse economy.

Whichever way you see it, the gamified, financialized metaverse is destined to be the next key front in the internet economy. But Web2’s major players are unlikely to go down without a fight. While some will cling to tired patterns, others – like Facebook – are pivoting and at least considering a new direction. If the vision of a fairer and more equitable Internet is to be realized, blockchain technologists and innovators will need to stay on their game.

Image credit: Rarestone Capital

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investment advice.

Michael J. Chiaramonte