By Erwin Werring, CEO of Attrace
The era of blockchain technology and cryptocurrencies ushers in developments that have the potential to transform many industries as we know them. The digital tokenization of value, tradeable between peers in a trustless and secure way, creates new economic systems and democratizes access to finance. However, often solutions that purport to offer this transformative potential are using today’s technology to fix yesterday’s problems when yesterday’s problems are based on yesterday’s technology.
Specifically, we need to talk about the gap between Web 2.0 and Web 3.0. Whereas Web 1.0 was the age of passive content consumption, Web 2.0, the internet of user participation, has brought us platforms like Facebook and Instagram, Uber, and Airbnb. Underpinned by fast browsing speeds, cloud computing, and most importantly, mobile connectivity, Web 2.0 is now woven into the fabric of our everyday lives.
However, from various perspectives, the model is widely regarded to be broken. Many of the problems come down to monetization, which is effectively controlled by the big platforms. YouTube creators make little from the ads they generate on the platform, around $3-5 per 1,000 views. But their monetization channels off-platform, including brand sponsorships or affiliate programs, often prove to be far more lucrative.
A Broken Model
When developing a blockchain solution, my own team and many others have approached the problem from the perspective of fixing what’s broken – attempting to align incentives in a world that’s developed around a misalignment.
In our case, we identified that referrals are a significant missing link in the world of Web 2.0. Effectively, the entire business of influencer marketing and promotions is based around referrals. Currently, there are various models in place to reward those who actively promote to their networks. One is the affiliate marketing model, whereby intermediaries known as affiliate networks provide a link tracking service and handle payments between publishers and advertisers. Another is where influencers will promote to their followers on a respective platform in return for payments off-platform, a largely unregulated and unmanaged hustle-based industry.
While these are problems, they are problems born of the Web 2.0 model. Web 3.0 offers a different proposition – one where revenue models need to be aligned to the incentives of the ecosystem participants. If Web 3.0 is the future of the internet, then we should be preparing for a scenario where broken models aren’t built into the architecture of the ecosystem. Furthermore, decentralization and data sovereignty offer the potential to completely rethink revenue models.
Therefore, the focus is now on launching a solution that’s fit for Web 3.0 – a trustless referral network for the tokenized economy. Many aspects of online marketing are set to change significantly. In the Web 3.0 environment, there are to be no centralized points of control, which means no dependence on intermediaries. A trustless referral network will allow any referral to be rewarded through the use of a decentralized validator network that confirms all successful sales.
There are multiple use cases for such a referral layer in the token economy. The ongoing appetite for NFTs offers vast potential to artists and creators to generate new revenue sources. Up-and-coming artists can offer commissions to networks of promoters for their newest NFT drops, creating direct connections between artists and buyers while still allowing the referrer to get paid.
Another use case could be in crowdfunding. A project wanting to promote a funding round via an initial DEX offering could offer a commission to those who refer token buyers.
Web 3.0 Is Already Here
The age of Web 3.0 isn’t tomorrow – it’s already here. We’re starting to see the early foundations form into an initial landscape of decentralized services, albeit many of them are still nascent offerings. Much of DeFi is now governed through decentralized voting mechanisms conferred to token holders. Non-custodial wallets, distributed file storage, and decentralized identity solutions are just some of the technologies now available to users, putting in place the infrastructural UX layers for the next level of innovation. It’s critical that we now apply a fresh mindset to building the next layer of applications to ensure that we don’t risk repeating past mistakes.
Author Bio: Erwin Werring is the CEO of Attrace, a blockchain project set to launch the world’s first referral layer for the tokenized economy. The cross-chain platform will allow anyone marketing or promoting tokenized assets to earn a commission for their efforts, creating a harmonized ecosystem for referrals.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.