To misquote Mark Twain for the purposes of this article, reports of the death of Web3 have been greatly exaggerated.
Yes, the value of all cryptocurrencies has plummeted. But wildfire inflation, soaring interest rates and recession's shadowy form will always favour more stable assets until the financial waters calm.
And yes, NFTs have their issues, particularly around use-cases and the ecological impact of the cryptocurrency system on which they're mined and traded.
But the creator economy is broken, and its legacy business models continue to be ripe for disruption. New blockchain technologies present an opportunity to redistribute value back to talent and their communities by launching sustainable growing digital social economies for creators and brands.
Any evolutionary technology often takes two, or even three waves to reach maturity. Just ask Mark Zuckerberg who rebranded Facebook to Meta a whole year ago in order to focus his company's future direction on building the metaverse, a virtual space synonymous with what many people currently associate with Web3.
While Meta's conviction continues unabated (Instagram creators will soon be able to create their own NFTs and sell them directly to their followers), we're seeing increasing evidence that Web3's hype-driven first wave is now at an end.
New advancements from the likes of Meta are moving ever closer towards decentralised economies and as the mists of consolidation clear and the remaining blockchain platforms resolve the energy consumption challenge, truly useful and more immersive applications will come into sharper focus.
In this second wave, the underlying technology to Web3 – the umbrella term for the blockchain-based, decentralised internet, which includes non-fungible tokens (NFTs) and decentralised finance (DeFi) – has even more potential to disrupt the traditional transactional relationship between brand and consumer by creating shared cultural value and giving ownership to the people (or communities) who create it.
That's why investments in Web3 and blockchain-related start-ups continue apace – because venture capitalists (VCs) understand that the inflection point we find ourselves at today isn't a bubble about to burst but instead an opportunity for a more viable ecosystem, where companies such as ours are solving practical, real-world problems.
At ScienceMagic.Studios we believe companies should be evaluating the opportunities through two lenses – Web3 readiness vs. Web3 curiosity. What we've observed over this past year is that there has been an increase in "readiness" and a greater sophistication in articulating the opportunity for Web3 beyond opportunistic NFT drops.
So far in the Web3 space, the projects and companies that have grabbed all the headlines have tended to be on the more gimmicky side of digital art, gaming or celebrity-endorsed collectibles.
As a result, aside from a lack of demonstrable use cases, a lot of cultural capital has remained on the sidelines. User on-ramps have been historically clunky; sustainable tokenomics structures remain elusive; there are few examples of compelling token utility and security is still weak.
But with evolved thinking, greater curiosity and investment from a broader range of VCs (dedicated to fintech and entertainment for example) into a broader set of Web3 capabilities, this is now changing and fast.
The building blocks of this second wave include "smart contracts", making it possible to better configure how digital assets interact with the world.
From programmable royalties to token-gated experiences, NFTs will evolve from their static form into a new, dynamic medium. They will be thought of as "keys" which unlock "rooms" in the new internet. For brands and talent, this offers exponential possibilities in engagement, loyalty, partnerships and commerce.
Tokens will further enable decentralised models of governance, making it possible to fund new projects, enlist community input or set up full-blown "decentralised autonomous organisations".
For brands and talent, this offers new modes of collaboration, where communities can contribute and be rewarded commensurately for doing what they're good at.
The promise of a second wave of Web3 is nothing less than a more creative, more equitable future and brands should be asking themselves "what's the opportunity for my business of an evolved Web3 solution?"
In a world where inequity is increasing and brand trust is waning, the appeal is hard to ignore – and the Centennial generation expects us all to play a role in pushing towards it.
David Pemsel is co-founder and chief executive of strategic and creative company ScienceMagic.Inc and Web3 digital asset studio ScienceMagic.Studios