Like every other step-change innovation, Web3, too, accompanies a promise: A truly egalitarian digital world with a level playing field for producers and consumers. In principle, it is an emphatic promise because the internet as we know it currently — the Web2, to be specific — has been monopolised by a handful of companies. Web3, with its blockchain-based decentralised models, token-based economics and interoperability, will upend the Web2 status quo and ensure that value creation and distribution are more democratised. In innovation-driven economies like the UAE, Web3 has already reached the institutional adoption stage.
There are roughly 1,450 active Web3 organisations in the UAE, with about 7,000 individuals. The government estimates that the Web3 sector’s contribution to the UAE’s economy is currently at a whopping $500 million. If you look closely, you’ll observe certain common traits exhibited by these early movers: Enhanced data security, good scalability, operational resilience, and an undeniable community spirit. Such outcomes have inspired the Dubai Metaverse Strategy, which aims to grow the ecosystem, adding $4 billion to the economy in the next five years and supporting over 40,000 jobs by 2030. Globally, the promise of Web3 is increasingly dawning on progressive brands, but, while the interest is evident on the surface, hesitancies remain dormant beneath.
As of March 2022, about 17 per cent of businesses in the IT sector worldwide have invested in the metaverse, an associated web3 development. The investors include needle movers such as Meta and Alphabet Inc. So, for a brand, the unavoidable question at this juncture is: What are those proponents looking to gain? Interestingly, even the investors may not give a definite answer because Web3 is not a destination; it is a journey filled with infinitesimal possibilities. If anything, brands are vying to gain a competitive advantage, knowing that Web3 is the eventuality. For those who find themselves at the crossroads, unable to reconcile the feasibility of the Web3 transition with business priorities, the following considerations will put things in perspective.
Understanding the brand purpose
Before tapping into the metaverse or blockchain, brands must understand that Web3 isn’t just a technological change; it is the evolutionary next step where the consumer will have more access than before. So, it calls for a revisit to brand ethos, long-term vision, and the customer pain points that the products/services aim to address. The line of questioning includes: What is my purpose? How will Web3 supplement that purpose? The answers will help brands make a meaningful Web3 transition instead of merely jumping on the bandwagon. The underlying principles — such as immutable ledgers and smart contracts — of Web3 ensure that hasty adoptions will only backfire, whereas purpose-driven pursuits will lead to a competitive edge.
Embracing user-driven innovation
Consumer interest in Web3 is driven largely by the opportunity to co-create. Brands must therefore be receptive to the idea of user-driven innovation through incentive-based participation of consumers in the Web3 environments. Forward-thinking brands such as Adidas, Nike and Wendy’s have set exemplary precedents in that regard. They are embracing user-driven innovation by giving their customers an avenue to identify with the brand and define its roadmap. Such a community spirit supersedes any marketing opportunity that Web2 offers.
Upholding safety and security
Web3 is inherently more secure, thanks to blockchain-based models. So, brands can leverage smart contracts to enter into royalty agreements, fix prices, and reduce trust deficits in transactions. At the same time, the accounting networks are immune to the efforts of intermediaries or bad actors. The transactions related to a particular product or service remain transparent on the blockchain for future reference. The Web3 transition requires brands to be ready for such accountability on their part.
Pushing boundaries through interoperability
The charm of Web3 lies in the intersections of associated developments such as decentralised autonomous organisations (DAOs), non-fungible tokens (NFTs), the metaverse, decentralised finance (DeFi) and digital assets. For a brand in any sector, there are multiple Web3 use cases that can yield product/service differentiation. For instance, the Emirates Blockchain Strategy increased administrative efficiency by providing unique identification numbers to residents. Likewise, corporates can revolutionise marketing efforts by capitalising on the interoperability that Web3 facilitates.
Continuing a steep learning curve
Existing Web3 developments are largely attuned to tech-savvy users. So, a broader transition will encounter roadblocks every step of the way. The journey from corded telephones to sophisticated smartphones was not seamless and without challenges. Yet, here we are, with the world at our fingertips. The idea is to start small, constantly educate oneself, and scale systematically. The regulatory limbo is clearing with the emergence of frameworks such as Dubai’s Virtual Assets Regulatory Authority (VARA). The day when an average customer can readily access Web3 may not arrive soon. But the brands need to arrive sooner.
