Web3 Projects Must Build Like Crypto-Natives and Think like Consumers As the Bear Cycle Bites

Two years ago investors took bold chances on blockchain projects. Then the deepening bear cycle saw cryptocurrencies lose $2 trillion in value since 2021’s peak and investors became more cautious. 

Now, after a year characterized by market struggles, not to mention the seismic shake caused by the collapse of FTX, many- both on the investment and development sides of the web3 ecosystem- believe 2023 is the year to continue funding and growing the space. 

In a recent address to the Future of Crypto Summit, Mastercard’s director of startup engagement, Grace Berkery, called current venture funding in crypto and web3 an opportunity, while also a good time to reset, giving a call-to-arms for funds and projects to maintain the web3 momentum:

Right now, people should put their heads down and build. You will be better off in the long term.

This sentiment is echoed by CVP NoLimit Holdings founder, Gin Chao, who also believes now is the time to continue building web3 investment portfolios. He argues that the current crypto winter appears to follow the same cycle we have seen repeated every 18-24 months (the last of which proved to be another successful investment period) and that we can expect spring to follow, though it might take a little longer this time given the current macro environment. 

Investors are continuing to put skin in the web3 game and Double Down, a $30 million VC fund from ex-Bain investor, Magdalena Kala, which launched in November, is particularly telling of the direction that funding is starting to take. The fund is dedicated to web3 consumer startups because she believes that the future of web3 adoption will necessarily be driven by the intersection between crypto and consumers. 

Equally VC fund, Speedinvest, advises investors to not only look to crypto-native teams to build the future of web3. Instead, they should consider that teams that combine the deep knowledge and expertise of native crypto engineers, alongside founders who can think like and build for non-native consumers, have the strongest potential to drive mainstream adoption. This is because having key players who are “native enough” but who aren’t blindsided by the basic technology struggles and educational-knowledge gaps that mainstream consumers may have, are better able to anticipate the kind of apps that have mainstream appeal. 

It is precisely at the crypto-consumer collision point that web3 projects have an even more powerful opportunity to build for and attract creators. This is because for all of the economies and sectors web3 has the potential to disrupt, and the list here is long, the creator economy can unlock the simple but powerful gift of storytelling. This, as the consumer side has long known, is the key to breaking open crypto and web3 for everyone. As the bear cycle continues to bite, web3 creator-focused platforms offer valuable insight into how web3 can tap into consumer culture and scale even during a crypto winter.

Where Web3 Meets Consumer Culture

In a report published earlier this year Speedinvest identified as many as 144 different platforms serving the web3 creator economy, and the list is by no means a comprehensive snapshot of the entire landscape. While some of the platforms in this space enable direct monetization, others provide creators with tools to enter the web3 economy. 

On the direct monetization side, projects targeting creators range from community tokens and content creation, to music and play-to-earn, and of course the metaverse and NFT marketplaces. Meanwhile, creator tools vary from those that enable fan interaction, to more logistical tools, such as those facilitating design and payments.

Here is a small and far from exhaustive handful of highlights from this space:

• Zestworld is a great example of a web3 platform that enables comic book artists to self-publish work, maintain intellectual property rights, and earn money from their fans.

• Glass.xyz aka the YouTube of web3, enables video creators to mint and publish videos as NFTs thereby maintaining video ownership

• NINA is akin to a web3 Bandcamp, enabling musicians to self publish and earn 100 per cent of their sales, while their Nina Hubs feature provides a network that links everyone from artists, to reviewers, to labels, to listeners, with on-chain programmatic royalties management.

• WOM Protocol and its wider ecosystem of products sit alongside these web3 creator economy platforms, enabling influencers and content creators to earn crypto by creating short-form word-of-mouth marketing videos. For initial testing and scaling of the protocol, WOM has integrated into self-developed apps, including BULLZ, the "TikTok of Crypto" mobile app, which recently launched the BULLZ Challenge Launchpad enabling NFT airdrops in return for a predefined service.

Biting Back During The Bear Market

The emergence of web3 creator platforms shows that web3 apps can be built to serve highly consumer-friendly and relevant use cases. Equally, funds such as Kala’s Double Down, and the general sentiment from VCs, indicate that finding the intersection between consumer and crypto is a smart and investable way to build out of the crypto winter and into the next spring.

Also published here.