With the emergence of blockchain as a key enabling technology, decentralisation has become the buzzword. Many popular big brands have now realised the importance of decentralisation and are gradually transitioning to Web3, the decentralised version of the Internet.
Big Techs, such as Meta (Facebook’s parent), announced its intention to transition into Web3 long back, and many other non-tech brands are also jumping on the bandwagon.
The Southeast Asian startup sector, however, has broadly adopted a ‘wait-and-watch approach’ and is double-minded when it comes to the Web3 transition.
Should they really migrate into Web3?
We posed this question to several experts and Web3 enthusiasts.
Also Read: Echelon 2022: Moving into Web3, why now is the right time? | e27
“It is definitely not a simple question to answer, especially in light of the bear market and macroeconomic headwinds today,” said Shaun Heng, Head of Spartan Labs at The Spartan Group, which advises, invests, and builds with entrepreneurs in Web3.
The transition also depends on the motives behind the move. “Moving from Web2 to Web3 should improve the user experience in one way or another. There are things that Web2 can do better than Web3, and there is no need to push everything into Web3. As long as the user experience benefits from the move, Web2 startups should consider looking to Web3 solutions if it fits their needs,” he added.
Undoubtedly, Web3 is set to transform industries and unlock new capabilities for value creation. While Web2 has never been designed to facilitate transactions, Web3 is changing the game by adding a transaction layer to the Internet. This will allow us to transact value and assets in a trust-less and secure manner, opening the doors to various new services and value models.
Apart from this, Web3 also offers a unique ownership model, allowing users or consumers to own part of the business via tokens or NFTs. This can engage the community in ways that would not be possible in the Web2 context. This also enables and empowers consumers to guide the business’s direction, creating a truly one-of-a-kind connection for diehard fans of specific brands.
“NFTs have brought about strong communities and brands that have grown from nothing to well-known brands in the space. NFT communities such as BAYC and Azuki have shown how much can truly be achieved with NFTs within just over a year,” Heng continued. “Beyond that, Web3 also lowers the barrier to entry for fundraising for startups. Whether fundraising via ICOs or NFTs, Web3 provides avenues to funding that was much harder to access in the traditional Web2 space.”
That being said, some industry watchers warn that before making Web3 transition, Southeast Asian startups should first deepen their understanding of this technology and how the transition would impact their business models and technology.
“Startups shouldn’t limit themselves by looking at cryptocurrency alone, as this is just a single limited use case powered by blockchain. Instead, they should look into applications like smart contracts as ways to optimise and automate their business processes and operations,” opined Xander van der Heijden, CEO of UNL, a provider of next-gen micro-location and mapping technology.
Rishi Randhawa, Head of Web3 Innovation at Enjinstarter (an IDO & INO launchpad for gaming, metaverse and P2E projects) also waxed eloquent about the benefits of Web3 transition. In his view, providing community members with ownership elements can help brands and businesses find new audiences, deepen connections with existing users, further segment fans into super fans, and, more importantly, grow and scale the brand much faster.
“Web3 is a total reshuffle of the traditional business model. From product to the community, we are now working the other way around where we build a community around a shared vision, empower the community to be involved in building the product and turn the community into ardent fans and backers from day one,” he added.
“Web3 is just the beginning of a journey of empowerment for communities and for people in general where their efforts and participation are rewarded through the things that they love,” Randhawa elaborated.
Qin En Looi, Principal at Saison Capital, has, however, sounded cautious, saying Southeast Asia’s startups should adopt a measured approach before leaping beyond Web2. “Web3 brings about several advantages, including community-driven growth, decentralisation to mitigate single points of failure and innovative ways of capital raising (e.g. via token or NFT sales). However, startups will be well served to start with the problems they are solving, then figure out the right tools from Web2 or Web3 for their solution.”
Rachael De Foe, a Web3 enthusiast and Founder and MD of PR agency Redefy, is more interested in unpacking the potential impact of a Web3 migration. “We don’t yet know the implications of moving entire digital populations to interact and transact ‘on the blockchain’. But with the right thought leaders leading the industry conversation, we can help startups make a more informed decision about whether the technology is a good fit for their use case,” she shares.
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Shaun Heng, Qin En Looi, Rishi Randhawa, and Rachael De Foe, along with Eddie Thai (Ascend Vietnam), will discuss ‘How Web2 Founders can leverage Web3 technologies and business models and Embrace the New Internet’ at Echelon 2022.
This year’s edition will be co-located with SWITCH at Resorts World Sentosa from 27 to 28 October 2022. Learn more here.
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