How can Web2 businesses implement dApps, NFTs, & DeFi solutions — or should they?

It’s become trendy to talk about Web3 as the new era of the internet that companies should rush to enter before others do. Indeed, adding NFTs, dApps, DeFi, and even games can increase engagement and sales — but it’s important to pick a relevant solution and implement it in the right way.

Acquisition, engagement, marketing: the best Web3 use cases for online businesses 

During the original ICO boom in 2017-2018, crypto enthusiasts predicted that blockchain was about to revolutionize just about every industry, from healthcare to construction. 

Five years later, some companies (like Walmart) do use blockchain in supply management, and around 100 banks have implemented solutions by Ripple Labs, but there has been no revolution to speak of. 

Blockchain hasn’t made much headway in Web2, either — meaning internet companies that provide online services in exchange for users’ personal data. These include Amazon, Alphabet (Google), Meta, Twitter, WordPress, Uber, SalesForce, AirBNB, Shopify, Telegram, Fiverr, Slack, HubSpot, all sorts of SaaS, and so on.

These Web2 giants aren’t interested in tokens or DeFi dApps development. You probably remember that both Facebook and Telegram tried to launch their own blockchain projects (Libra and TON, respectively) but had to close them down. 

By contrast, using Web3 tools to strengthen marketing, brand awareness, user acquisition, and engagement is a different story entirely. A great example is NBA Top Shots — NFT collections of the best moments from NBA games. Top Shots already have over a million active users. 

Can a regular Web2 business achieve a similar success? Yes — but only if you pick the right solution (be it NFTs, GameFi, a DeFi wallet app, loyalty tokens, etc.) and have the support of an experienced partner. Below we’ll look at different options: their risks, advantages, and which businesses can benefit from them.

DeFi and dApps

BDC Consulting often gets requests for consulting services from Web2 business owners asking how to launch their own tokens and/or how to build a DeFi app. This is a difficult task for a number of reasons. 

1. Limited utility. Why would users buy such a token? The most common use case is a loyalty system, where token holders become eligible for discounts and various bonuses. This has little to do with real DeFi — and besides, the extra revenue from such a program won’t necessarily cover the costs of implementing it.
2. Costs. It costs dozens of thousands of dollars to build a DeFi app. With a limited budget, you can launch either a copycat crypto DeFi app (one that mostly copies the code of one of the top decentralized finance apps) or a basic yield farming program on a DEX, of which there are already  hundreds. You’ll also need to spend money on marketing, an IDO, an exchange listing, obtaining a legal opinion for the token, etc.
3. Security. Even the best DeFi app can get exploited. If this happens to your DeFi app, your business reputation will suffer, so any DeFi product or token needs to be professionally audited. Critical vulnerabilities are most often found in copycat dApps that use other protocols’ code with minor changes.
4. Regulation. A token or a DeFi mining app will be difficult to register as part of your existing Web2 business. It can happen that you launch a token but will be unable to discuss it in any of your marketing communications because of regulatory restrictions.

You should also consider that decentralazed dApps are called decentralized exactly because users can connect to them without coming in contact with the company or founders behind it — and without providing any personal data.

Sure, you can allow only your registered users to access the graphic interface of your DeFi crypto app. But any technically advanced blockchain user will still be able to interact with the dApp’s smart contract directly via the command line and execute any transactions — as long as they know the contract’s address. 

Moreover, if your dApp ends up being used for some illegal purposes or to circumvent international sanctions, your company can end up in  hot water. 

So does it make sense for a Web2 company to build a DeFi mobile app? Yes — but only after creating a detailed financial and business model with all the costs and monetization streams, plus several scenarios. This model should demonstrate that the dApp can yield a profit — for example, as a result of attracting new clients. However, based on our experience building such models for BDC’s clients, DeFi solutions are rarely profitable. 

Luckily, there are cheaper, more effective, and more secure Web3 tools, such as NFTs and GameFi. 

NFT: marketing, token gating, and engagement

The NFT bubble of 2021 may have burst, but the NFT era has just begun. Hundreds of thousands of end users first discover the world of blockchain not through top DeFi dApps, but through NFT platforms: NBA Top Shots, games like Axie Infinity, and marketplaces where artists can mint and sell their works and NFTs. For instance, in a recent survey 17% of respondents aged 18-34 said to have experience with NFT games, and in India the percentage is even higher at 29%. 

Let’s now analyze the most promising use cases of NFTs for Web2 companies. 

Token gating

Token gating or NFT gating is a way of identifying a user through NFTs in their wallet. For example, to access some premium service you may need to hold an NFT from a premium collection issued by the service provider. If you are familiar with subscribers-only articles on websites like The Washington Post, you’ll know how this works. 

The advantages of NFT gating over regular premium subscriptions

• Gamification. Minting and NFT to find out what sort of picture you get is fun in itself. A business can periodically launch new collections timed with the release of a new service — and even allow its customers to use NFTs as avatars. This applies to all NFT use cases for Web2, of course, and not just to token gating. 
• Solving the freebooter problem. Customers can’t simply share their credentials with friends or relatives to let them use the service for free. You need to  hold an NFT in a wallet. 
• Selling one’s access rights. If a customer doesn’t want to use the service anymore, they can sell the NFT to somebody else on a marketplace. You can even add a royalty feature to the smart contract and earn a share of the revenue from each secondary sale. 

The key difficulty when implementing token gating is to ensure that the company earns enough money to make it worthwhile without making the NFTs too expensive. For example, you can launch quarterly NFT mutation campaigns, where users can turn old NFTs into new ones paying a bit extra in tokens. This will keep the game element while delivering regular revenue. 

In any case, token gating is a marketing move first and foremost — and a very newsworthy story. Designing an NFT collection and launching a mint on OpenSea or Magic Eden costs much less than DeFi app development — and you won’t have to spend money on a blockchain audit or an exchange listing, either. 

In exchange, you can expect to attract new users and make the old ones more engaged; get featured in the media; and host an array of community activities, such as NFT drops, contests, etc.

Community building and ambassador programs

Users love trophies: OG statuses, gold avatars, legendary levels, etc. You can use this psychological phenomenon to build an NFT-based incentive system, where various community achievements will be rewarded with NFTs of different rarity ranks. 

You can really let your imagination run free with this one:

• NFTs as rewards in quizzes about the company;
• for spending a certain amount on subscriptions;
• for activity in Telegram or Discord;
• for collecting a set number of loyalty points;
• for the best platform review, and so forth.

Besides, if you are thinking about launching a full-scale ambassador program, NFTs will help you sustain a healthy level of competition and encourage ambassadors to create quality content. 

NFT design can also vary: from a „real“ collection of thousands of unique characters to a limited set of images.

Just like with token gating, users will be able to freely sell their NFTs (and you can earn royalties). This is an additional incentive to participate in the campaign. 

Co-branding and collaborations

Are you planning an integration with a new partner? Then why not launch a co-branded NFT campaign to create more hype around the event?

Another idea: partnering up with a popular NFT project to release a co-branded product. When Adidas announced a collection together with Bored Apes Yacht Club and GMoney, it became one of the hottest NFT events of the season. Every buyer was entitled to free physical merch: a hoodie, a tracksuit, or a beanie. Adidas made $43 million over the 4-day NFT sale. 

Photo: Adidas

For now, such collaborations are common mostly among companies that produce physical goods: clothes, fragrances, gadgets, and so on. But it’s totally possible for a SaaS startup to partner up with an NFT project and release an exclusive collection for its users. You could also provide all the holders of the partner’s NFTs access to your services on special terms. This would essentially be token gating, but bundled into a collaboration. 

GameFi: games that use NFTs and tokens

The team of BDC Consulting recently created a full concept of a Play-to-Earn (P2E) game for a real-world company that processes natural resources. The goal was to attract attention to the industry’s environmental issues, increase brand awareness, and differentiate from the competitors. 

We conducted a market and competitor analysis, compiled a tokenomics model and a list of required features, packaged the project for investors, and designed a marketing strategy and a plan for an INO (Initial NFT Offering). The result was a P2E game that woul be interesting both for  the company’s customers and the general audience.

If even an industrial manufacturing company can benefit from introducing GameFi, so can SaaS  and other Web2 businesses. From the point of view of user engagement, community building, and media attention, GameFi works even better than a simple NFT collection. 

Of course, it costs more to develop a game than a collection of non-fungibles. Besides, apart from the NFTs, you’ll probably need a utility token to reward the players. However, if the packaging is done right, you should be able to raise money from venture funds and other large investors, as well as via an INO. Once again, you’ll need the support of a crypto consulting and marketing partner, as well as at least six months for preparation. But the results are usually worth it. 

Metaverse

Finally, let’s look at the most advanced use case: direct presence in the metaverse. This usually implies buying a virtual land plot on a platform like Decentraland or The Sandbox, and opening a metaverse branch, store, or entertainment space on the plot. Examples include Gucci, Samsung, AXA insurance company, and Atari gaming studio.

Virtual land costs upwards of $2,000, but you’ll need to spend much more to design your branded metaverse space. Moreover, users need more crypto skills to interact with Decentraland and other metaverses than just to receive NFTs. Therefore, it makes sense to experiment with collections, token gating, and collaborations first — and only then start thinking about metaverses. 

In conclusion

We’ve mentioned more than once how important it is to find the right partner. Indeed, if your business isn’t directly connected with NFT, GameFi, or DeFi, it will be difficult to implement such a project one your own — starting from market analysis and monetization strategy and finishing with an IDO, IGO, IMO, or INO. If you’d like to know more about a specific stage in this process, or to discuss a partnership, get in touch with the BDC team through the contact form on the site. It will be our pleasure to share our insights.