Last week I had the privilege to moderate a discussion around new business models for Web3 projects in the European Blockchain convention in Barcelona.
As expected for a Venture Capitalist, I surrounded myself with experts who know much more about the matter at hand than myself, such as Anton Pastoriza, Associate Director at BCG Platinon and Alan Draguilow, Head of Product & Ops at Prosegur Crypto.
We covered quite a lot of ground in our discussion, but these are the key topics that resonated for me. It is clear by now that, Web3 is becoming a new wave of disruption, with conventional intermediaries adopting new roles. But this transition will take some time, with Web2 and Web3 coexisting for a while, just as Web2 coexisted with the early web.
There is a tendency to reproduce Web2 business models with Web3 dynamics and technology, while we discussed that new business models need to be developed, taking advantage of the unique characteristics of Web3, and moving beyond the limitations of Web2. Most of the technology is already in place and what is needed to ensure mainstream adoption is actually a change of mindset.
There are some examples of businesses that have embraced the possibilities of Web3, which were shared during the panel, such as how a car manufacturer shares its supply chain ecosystems with partners and clients, improving lead times and transparency on the process, reducing operational costs. Or how a food company collaborates with its partners to create a sustainable ecosystem around blockchain, certifying local captures and local productions. Or an investment banking firm which collaborates with custodians and other financial institutions, increasing transparency, simplifying operations, and reducing costs across the value chain.
Going back to the mindset shift challenge, a relevant reason stated in the event for the slow adoption of Web3 is the poor acceptance of wallets by consumers, mainly due to crypto fear and complex usability. Interoperability across blockchain networks is another issue that needs to be addressed, making it viable for a retail user to manage multiple wallets, one per network. However, technical interoperability across networks is likely to get better, and digital identity or sovereign identity as a mainstream are expected to trigger wallet adoption.
Cybersecurity and stronger interoperability are some of the pieces missing to enable a full comparison with Web2/Web1 where I feel as an investor that we could find great opportunities. Building the lego pieces which are missing to ensure a full stack of architecture, infrastructure and services.
We also touched on the subject of governance, and how it is difficult to maintain decentralization once adoption increases. Major blockchain networks do not start decentralized at the beginning and stay under the governance of a foundation, and big players in the industry suffer the same scenario. To progress towards decentralization, some best practices need to be applied, including ecosystem thinking from the beginning, setting clear governance rules for participants and setting roles for participants in the ecosystem, clarifying rights and responsibilities.
There is a clear appetite for Web3 business models among corporates, and projects are moving from innovation theater into projects with a specific impact on their customer base. And it is clear that to build a decentralized business model, companies need to shift their mindset from 1-to-1 agreements to standardized agreements with automated settlement processes. They need to move from bilateral relationships to a collaborative structure of interdependent partners where each partner is incentivized properly. This naturally requires wider cooperation across the value chain, with three mindset shifts: a move from bilateral relationships to multilateral relationships, a move from hierarchical structures to network structures, and a move from transaction-focused to relationship-focused.
Despite the current crypto frost, Web3 business model are an early reality at the verges of exponential growth. It will progressively gain adoption, moving out Web2 solutions and making Token Economy the new normal. The challenges of the transition to Web3 are significant, but the potential benefits are enormous, with increased transparency, simplified operations, reduced costs, and improved reputation, among others.
As more companies embrace the possibilities of Web3, it is likely that we will see a new wave of disruption that will transform the way we do business in the 21st century.
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