Innovation in Business Q4 2022

Apr21077 Alan Vey, leading tech entrepreneur and blockchain expert To avoid the term ‘Web3’ being thrown around as a meaningless buzzword, it is important to start by defining it. And to do that, we have to take a look back into what has come before, tracking the evolution of the various Web iterations. Web1 was ‘READ’, access data that was hosted on the network. The second phase, Web2, added ‘WRITE’, which enabled user-generated content to be shared via apps like Facebook, Instagram, and Twitter. The third iteration, Web3, added ‘OWN’, offering users the ability to truly own in a digital context and not just have a digital representation of physical ownership. The hyperbole of the metaverse and why DAOs are the real MVP With the defining aspects now established, we can start to see how the exciting technologies being developed within the paradigm of Web3 have the potential to bring a wealth of opportunities for businesses. Currently, it would seem that for many businesses, the metaverse is the biggest talking point regarding Web3’s potential. Such is the hype surrounding metaverse, which can vaguely be described as virtual reality environments where users can interact much like in Speilberg’s ‘Ready Player One’ adaptation, that Facebook not-so-coincidentally rebranded itself as Meta. The social network giant has already invested $10bn into metaverse projects though we have yet to experience the disruptive transformation it has been touted to deliver. So rather than add further hype and speculation to the metaverse, it is better to look at a Web3 case study that has proven immensely successful – Decentralised Autonomous Organisations (DAOs). Often referred to by their popular acronym, DAOs encompass what a Web3 business would look like. What separates DAOs from traditional corporate structures is that, as its name suggests, they are decentralised and completely autonomous. Rules and protocols of any given DAO are encoded as algorithms, represented by Smart Contracts (i.e., computer programs that run on the blockchain), and set by members of the DAOs. This novel way of running an organisation has proven to work well. Take, for example, the Bored Ape Yacht Club (BAYC). Massively popular among crypto aficionados, BAYC is a set of 10,000 limited NFTs that resemble images of commercial apes, each with different traits. BAYC has achieved success both in the crypto and in the mainstream, generating a total trading volume of $1.6B so far. Yuga Labs, the company behind BAYC, is valued at $4bn. Most businesses rely on the infrastructure of the Web to scale their operations and innovate. As the next iteration of the Web, known as Web3, steps into the spotlight, businesses cannot afford to overlook its potential in creating new revenue opportunities and enhancing their operational efficiencies. Forwardlooking CEOs are already preparing to incorporate Web3 applications into their operations. For example, 53% of C-level officers identified blockchain as a crucial part of their organisational infrastructure in 2020 while 60% of CIOs expect to adopt blockchain technologies in the next three years. Alan Vey Even as the crypto market faces one of its most challenging periods, BAYC NFTs have impressively held their value. The large-scale NFT DAO project continues to attract talent away from smaller blue chip projects and retain its user base, demonstrating the robustness of its community-led organisation. Traditional companies can learn a lot from BAYC’s success. Although DAOs are set up in a way to remove complete control from a few select people in an organisation, this act is immensely empowering to those who contribute to the DAO as it gives them a firm stake in the organisation, fostering true loyalty within an engaged community. This concept can be taken even further in the future where one may consider Network States amassing sufficient resources and individuals to enter into negotiations with Nation States to achieve high-level objectives around legislation, etc. NFTs are still an exciting way for brands to engage with their audience We mentioned NFTs in the previous section in regard to BAYC but what exactly are NFTs and why have they become the ‘killer application’ for blockchain technology? An exciting byproduct of blockchain technology, NFTs enable brands to create value through scarcity and reward loyal customers. The reason why BAYC NFTS are so sought after is precisely due to their deliberate paucity. If blockchain meant nothing to the average pedestrian before, it can be argued that it was NFTs that finally propelled the technology into the imagination of consumers. It did not take long before dozens of celebrities, from Snoop Dogg to Bella Hadid, launched their own NFT projects. Big brands like Nike discovered much success with NFTs with the sports conglomerate having made $185 from the sales of its NFT collectibles from the additional royalties. If the potential value of blockchain technology was not clear before to businesses and consumers, then NFTs not only made it clearer, but it was an effective showcase of how blockchain technology can be used to create a strong sense of community between brands and their followers. NFTs are truly unique because they are built on a blockchain ledger, the exclusivity and scarcity are inherent, attaching value to them. While the hype around NFTs has since lessened, there most certainly here to stay