The Web3 Brand Trilemma by Jose Anaya
You may have heard about the Blockchain Trilemma going around. It argues that you can’t achieve scalability, decentralization and security simultaneously when building a blockchain. Thankfully, we’ve seen notable strides in solving it—take ZKsync for example.
However, when it comes to helping brands enter web3, I fear we are now facing a different trilemma. Something that is keeping them from succeeding like they did in web2.
While many brands are experiencing it, few people are talking about it. This might ruffle some feathers, and in a way, I hope it does.
What’s this trilemma, you might ask?
As web3 builders and web2 brands bringing innovation to the masses, we need to do better. We need to get real with ourselves and call BS when a model doesn’t work. We need to abandon broken cycles and find a stronger, deeper way to make a web3 entry successful.
The web3 brand trilemma is a tension between 3 forces:
1. Community 2. Experience 3. Revenue
Brands want all 3 when it comes to entering web3. Frankly, I don’t blame them. They’d be foolish not to.
Everyone wants to build a thriving community while delivering a stellar consumer experience and generating meaningful revenue.
That’s how it works in web2. Why should they settle for less? But here’s the thing, web3 just isn’t there yet.
And if you’re a web2 brand and someone has promised you all three in web3, there’s a high chance you’ve been fooled…or given a giant grant!
The problem with initiatives in web3 today
Let’s face it, the web3 market is still tiny compared to web2. There just isn’t sufficient revenue potential from web3 users to make a big enough drop in these brands’ revenue buckets.
In fact, most web3 initiatives are experimental these days. Or might I argue, commissioned? You’ve seen it happen:
👉 Brands often get a massive grant for a web3 initiative and designate a team to try it out—sometimes withholding key resources like marketing until web3 pays off. Compared to web2 metrics, an initiative like that would generate little to no traction! So these brands tend to sunset these initiatives, and move on to the next big thing with little to no loss since it was all grant-funded from the start.
Now, what if the future of your brand relied solely on web3?
I would argue a grant would be irrelevant and any brand would be doing everything they can to make the web3 initiative a success.
You might come across the web3 brand trilemma: a situation where you need to compromise experience, community or revenue.
Scenario 1: experience, community, no revenue
Brand runs a web3 initiative that delivers an engaging consumer experience and garners a positive reaction from the community, but generates little to no revenue.
Scenario 2: revenue, no community, no experience
Brand goes after revenue first but fails to deliver a compelling enough consumer experience which leads to a poor community reaction.
Scenario 3: revenue, experience, no community
Brand delivers an experience that is engaging and smooth and generates revenue, but fizzles out because there was no compelling reason for the community to stay and continue engaging.
Unfortunately, many brands are subconsciously or consciously forced to pick 2 of the 3. But the good news is, this is changing!
Rarible is solving the web3 brand trilemma
How, you might ask? It starts with the why behind the web3 initiative your brand is pursuing.
Initiatives that consist of a strong enough why (or idea) from the brand, as well as the strategy and technologies from web3 partners to deliver on all 3 goals: that’s how you make it in web3.
At Rarible, we’ve been privileged to help leading brands like Mattel enter web3 in a way that solves the web3 brand trilemma.
Want to know how we did it? Here’s a glimpse into our framework:
💛 Community: Start with the community (the captive audience that is poised to receive the brand’s initiative well) and cover your bases by cross-pollinating audiences.
Mattel has a vibrant community of Barbie lovers and Hot Wheels fanatics that we were able to migrate onchain.
💛 Experience: Migrate consumer products onchain that already deliver delightful consumer experiences, and gain an edge when blended with web3. Combine that with technology that enables a seamless experience without the need for explanation. Provide insights into experiences that lead to ongoing engagement and community creation.
People already love collectibles, and moving the collecting experience on-chain makes tons of sense. It's fast, dynamic, and safe.
💛 Revenue: Monetize those consumers in a way that is relevant to web3 and web2 audiences. Provide guidance based on pricing insights & trends. But more importantly, leverage royalties to unlock unprecedented revenue opportunities.
We successfully assisted Mattel in transitioning from physical to digital collectibles, making an epic leap that not only captivated new generations but also re-engaged older fans. The results speak for themselves: a GMV of $3.7M+, 215K+ users, and 79K+ transactions.
How is your web2 brand or web3 company solving this trilemma?
If you’re a brand looking for a trusted web3 partner for entering web3, let’s talk!
Kick off your project with an NFT-native team that's been crafting user-friendly web3 products for over 5 years, used by millions.