By Everett Muzzy, VP of Content, Serotonin
The world’s largest brands are marching towards the metaverse. NFTs have offered companies novel ways to engage with their audiences, but skepticism still exists about what precisely web3 is and how brands can effectively adopt it. The solution is in front of us. It’s called web2.5, and it describes perfectly the most powerful and immediate way for brands to start innovating and testing NFTs.
When we talk about the metaverse, what do we mean? Let’s take a step back for a moment and separate the metaverse from any mention of web3. The metaverse is our growing online world. It is the digital, non-physical realm in which we will increasingly play, work, transact, create, spend, consume, engage, connect, interact, and communicate. Through this lens, no one would disagree that we are already well on our way towards the metaverse. We are spending more time than ever online. Our phones are practically digital extensions of our limbs.
So where does web3 come into play? If you believe that humans are going to spend more and more time in the digital realm, and you believe this digital realm will grow more sophisticated and ingrained in our daily lives, then you believe in the metaverse. If you believe in the metaverse, then you’ll likely believe that it will be enabled by the technology best suited to make it happen. Web3 is that technology. It offers the type of permissionless technical composability that the metaverse requires and that only open source technology can enable, but it does so with monetization in the way of tokens that current open source hasn’t been able to natively sustain.
This stands to reason that those who want to be building towards the inevitable metaverse should be building in web3. Just like the metaverse, web3 isn’t a final destination, but rather a waypoint on the neverending evolution of technology. Web3 is a journey; just the latest point on the arc of the internet, starting with web1, thriving now in web2, and beginning to shift towards web3.
Moving towards web3, therefore, isn’t a binary jump from web2. It is a migration, one that is implemented slowly but steadily in various distinct components that come together gradually over time. Web3 is our current migration, and with every great movement there is an accompanying extinction of those incapable or unwilling to follow along.
In the last 18 months, we have seen some of the world’s largest and most established brands move towards web3. They’ve been figuring out how to lean into web3 as a migration instead of an extreme choice. Specifically, they’ve done this through a model we’re calling web2.5 — a term meant to demonstrate precisely that web3 is a journey along a spectrum.
What is web2.5? Web2.5 describes the adoption of decentralized technologies like NFTs within web2 frameworks that allow for strong discovery, user experience, and brand retention.
Let’s break this down. If we had to carve up web3, we could draw a reasonable line between web3 assets and web3 infrastructure. Web3 assets are the things many people are familiar with, namely NFTs and fungible crypto. Web3 infrastructure, on the other hand, is the set of tools and protocols that support the entire web3 ecosystem.
The reality is that despite the bubbles, volatility, and controversy, web3 assets have undergone tremendous understanding, acknowledgement, and adoption. Crypto assets have brought hundreds of millions of people into the fold. Web3 infrastructure, on the other hand, is a beat behind.
So what do we do when the appetite for something like web3 assets surpasses the appetite or capabilities of web3 infrastructure? We compromise. And that compromise is web2.5. Web2.5 describes the adoption of web3 assets within web2 (instead of web3) infrastructure. If web2.5 emerged as a compromise to bridge the gap between web3 assets and web3 infrastructure, doesn’t that mean it’s not ideal? Don’t compromises typically not deliver fully on either promise?
Not for web2.5. Buying ETH with your debit card on Coinbase is a compromise of a web3 asset being accessible with web2 infrastructure. But no one would remotely suggest that enabling debit card purchases has done anything but rapidly accelerate the adoption of crypto. This is the untapped power of web2.5. The world’s largest brands are just starting to realize that they can leverage their most powerful tools — their existing web2 channels, audiences, and communication — to introduce and innovate with novel assets like NFTs.
These brands have spent decades building and curating their loyal audiences. This is what they excel at. They’ve built teams and poured immense capital into identifying, communicating with, attracting, engaging, and rewarding their audiences. They may have brought their audiences through the first wave of digitization, onboarding them to the earliest days of the internet. They’ve kept and evolved their audiences through the rise of social media, layering in communication strategies to appeal to different channels and sub-audiences. Unlike what many brands may feel, getting involved in web3 doesn’t require them to abandon any of these strengths or technologies. Rather, web2.5 enables brands to leverage their proven ways of audience communication while testing out novel ways of audience engagement.
In the last 18 months, we’ve seen well over 100 of the world’s most established brands activate web2.5 — in fine art, fashion, sports, media, and more. Overwhelmingly, these brands have tested out NFTs by innovating auction houses, physical redemptions, gated access, virtual world events, and much much more. So far, web2.5 is dotted with examples of both successful and unsuccessful NFT activations. And yet, this is just the beginning. These brands are starting the migration, leading the pack, clearing the way, and establishing best practices for more brands to join.
With every great migration comes a great extinction. Alongside the migration towards web3 and the metaverse, there is the undercurrent of a dark and poignant economic reality many brands today are facing. Our society is collectively standing in the final glow of a postwar economic stability that enabled and sustained many of the world’s leading brands for the last 40-70 years. 2008 was the first portent of changing times. It is very likely we are standing on the precipice of another. Current and future generations are not guaranteed the economic stability of their parents and grandparents. Lest brands forget, it was precisely this economic stability that allowed them to expand so steadily in the last many decades.
In the face of this future, brands have to innovate and test more aggressively than ever. We believe web3 is the greatest opportunity out there. It is most closely aligned with our progression towards the metaverse, and it unlocks entirely new methods of engagement, growth, and technical complexity. And yet, web3 isn’t requiring any brand to abandon its past and dive in headfirst all at once. We’ve seen in the past 18 months what brands can do with a more measured and intentional web2.5 approach. We will see in the years to come which brands elect to join the migration.
Not doing so risks being part of the extinction.
Everett Muzzy is the VP of Content at Serotonin, a marketing services firm and product studio for web3. Previously a researcher and editor at ConsenSys, Everett writes extensively about the evolution of the internet and the ability for web3 to complete the missing infrastructure to enable a decentralized future.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.