Web3 long-term operation strategy: provide users with continuous services instead of falling into Ponzi incentives

Written by: Bastian, VP Of Products at Smart Token Labs

Source: Deep Tide TechFlow

As more and more brands enter the Web3 space, thousands of users follow suit. So let's take a step back and examine: what conditions are necessary to successfully launch a Web3 project that can enhance brand loyalty and visibility, rather than harm it?

After the NFT hype of early 2021 faded, it became clear that uploading jpegs to the blockchain was not enough to create value, sustain a healthy community, and promote engagement among its holders. A typical example is Jack Dorsey's first tweet, which was sold as an NFT for $2.9 million. The buyer decided to sell the NFT on OpenSea for $50 million, promising that half of the proceeds would go to charity. When the auction ended a week later, the NFT received only 7 bids, with the highest bid being 0.09 ETH (at the time of writing, ETH was $109). Jack Dorsey's Twitter NFT did not maintain its original sale price, nor did it appreciate, as it offered no additional rights to its holder. It was merely a "souvenir" commemorating an important moment in internet history, and aside from being issued on the blockchain, it provided no rights to its holder.

A new study by blockchain analytics firm Nansen shows that most NFT collections either do not make money or have net returns lower than the initial costs required to create them. One-third of NFT collections on the market have hardly been traded or have not been traded at all. An example of this trend is World Wrestling Entertainment's (WWE) experiment with NFTs, where only 7.4% of the initial 500 NFTs were purchased by its true fans. This is a company with an audience and passionate fans, filling stadiums with its weekly events. The high ticket price of $1,000, along with some carefully selected physical merchandise by John Cena, did not provide any rights to the services offered, leading to a lack of interest in the series from the Web3 and WWE communities. This also raises the question: is the target audience really interested in WWE as a company?

On the other hand, Nike has been experimenting with its Web3 strategy. In December 2021, they acquired the NFT studio RTFKT. Since then, they have had some successful NFT releases, generating $185 million in revenue. Their first event was Cryptokicks. The collection included 20,000 sneaker NFTs, one designed by artist Takashi Murakami, selling for $134,000. Additionally, the company has experimented with exclusive NFT airdrops and phygital (physical and digital combined) projects. Users who purchased digital collectibles of sneakers had the chance to receive physical sneakers related to the NFTs. RTFKT's community server currently has 236,000 members, demonstrating their strength in community building and their ability to leverage Web3 to bring economic benefits to their most loyal customers.

When brands seek the same culture in Web3, they need to compete with esports brands, emerging digital fashion companies, influencers on TikTok, and content creators on YouTube, many of which have gained favor with Generation Z. Before the competition even began, Nike had already firmly embedded itself in Web3 culture. Nike views Web3 as a facet of a larger phenomenon: a new cultural movement, while other brands treat Web3 as a new technology to dabble in. However, it is clear that Nike has quickly established itself as one of the most popular brands in the Web3 space.

(courtesy of Midjourney --- A visual representation of business commitment)

From Nike's strategy, we can easily infer that building a strong community is the most important prerequisite for creating a successful loyalty program/NFT project. The quality of the community is ultimately the deciding factor for the project's success. Your collectors (community participants) should always be the top priority, whether you are an independent artist or a traditional brand trying to taste success in the Web3 space. The more effort you put into brand building now, the greater the chance of successfully selling/releasing an NFT project and establishing a long-term loyal fan base. Fair pricing is crucial, as evidenced by the WWE NFT project. Some projects, like Smol Brain, have chosen a "free mint" approach, hoping to create value through secondary sales and control risks.

Drafting a compelling roadmap, promoting and disseminating it on the right social media, and adhering to that roadmap is equally important for achieving success. We should no longer imitate the successful path of BAYC. BAYC initially started with 10,000 unique Ape artworks, but its community continued to grow, rewarding its holders with new rights. In the early days, BAYC airdropped serums to allow holders to create mutants, greatly stimulating interest, allowing many BAYC holders to sell their mutants or serums at prices much higher than the original mint. Subsequently, they announced the development of the Otherside metaverse and airdropped ApeCoin as the future currency of their metaverse. Holders can use ApeCoin to purchase land in the metaverse called OtherDeeds and build public facilities on that land, ultimately monetizing their ownership. Through all these innovative proposals, it is clear that BAYC is committed to creating long-term value for its holders.

Nansen's trends and index dashboard show that by the end of 2022, the trading volume of Ethereum NFTs reached 8.22 million ETH, involving 2.46 million unique wallets. The total market capitalization of the NFT market exceeded $11.3 billion. It is predicted that the market will grow at an annual rate of 33.8% over the next eight years, reaching a total market capitalization of $231 billion by 2030. These statistics reinforce the argument that brands must adapt to the evolution of Web3 and commit to providing their users with continuous, engaging content or services; otherwise, once this technology becomes the norm, it may slowly become saturated and difficult to capture market share.