Tokens are devouring traditional business models. Why believe Web3 will change the world?
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Tokens are devouring traditional business models. Why believe Web3 will change the world?
We live in an uncertain era.
Navigating Web3 tides with focused insights
Author: Martin Majd El-Khouri
Translation: TechFlow intern
We live in an uncertain era. Covid remains an issue, the war in Ukraine continues after four months, European stability is disrupted, global power balances are distorted, triggering a worldwide crisis. Supply chains are under pressure, natural resource prices have surged, and the wealth gap keeps widening—the endless dream of globalization appears to be coming to an abrupt end. A new term circulating in media these days is “hyper-regionalization,” which some already see but most do not.
At the same time, excessive money printing, especially during the Covid pandemic, has caused inflation rates in the EU and US to rise at unprecedented speeds. Global economic growth is weakening, presenting challenges for investors, policymakers, and global markets alike. The Nasdaq index has dropped by 25%, and the entire cryptocurrency market has declined ~70% from its respective all-time highs (ATH). For many critics, this signals the end of the "hype" around the Web3.0 vision.
In fact, this vision has only just begun. We are witnessing the birth of a new technology reshaping how digital businesses operate and endowing these ecosystems with assets we call cryptocurrencies. Owning crypto assets is like owning shares in a growing ecosystem—successful projects built on them generate real-world value, creating revenue and profits. But as these ecosystems unfold, there are naturally challenges to overcome and trust to build. As such, they are more volatile than other asset classes that have existed for decades.
The current state of the Web3 market is unique because the collapse was also driven by systemic failures of several centralized players (Terra LUNA, Celsius, Voyager). The resulting misconception is that DeFi has failed. But this conclusion is entirely wrong. What failed was centralized finance—startups like Celsius were over-leveraged. Decentralized financial protocols functioned well and continue to be built. This misunderstanding is part of the innovation cycle we're experiencing. Industry events and macroeconomic downturns have placed immense pressure on the sector. Yet despite these conditions, in June 2022, the Web3 ecosystem saw unprecedented growth over the past 13 years, with a compound annual growth rate of 270%. This current pressure will continue to cleanse the market, and successful projects will emerge stronger than before. I firmly believe this for the following reasons:
1. If we assume the internet won’t disappear, then it must keep evolving—into Web3.0.
2. Despite declining valuations, fundamentals remain unchanged—Web3 adoption continues to follow the early internet’s trajectory.
3. The value proposition of Web3 business models is clear.
4. A massive influx of talent is entering the industry, viewing its challenges as enormous opportunities.
Over the past seven years, Web3 adoption has followed the same pattern as internet adoption in the 1990s. If this trend continues, reports predict that by 2027, Web3 users could reach 1–1.5 billion—more than five times today’s estimated 200 million. If the mid-term vision unfolds, public blockchain technology is expected to support 10% of global GDP by 2027. That would represent a $13.4 trillion market, where tokenization plays a key role.
Tokens: A New Way of Thinking That Unlocks Immense Potential.
Web2 made user-generated content possible—but at the cost of platforms monitoring that content. Centralized platforms define today’s Web2.0 era, and rightly so. Platforms like Amazon, Facebook, eBay, and Twitter emerged as responses to how companies go to market in this age of the internet. The vast majority of value accrues to these platforms rather than users. They bundle various intermediary services and justify their fees accordingly. Investing heavily in sales and marketing to generate leads and retain customers is crucial—which makes sense given one fundamental challenge of the internet: marketing. In Web2, ownership and value don't play significant roles.
Web3 promises to become a trustless, transparent ecosystem with minimal intermediaries. And it introduces the concepts of ownership and value. Web3 aims to be a value internet—not just an internet for information and communication. The mechanism enabling this is called tokens. Tokens transform the logic of digital business—they can represent scarcity, serve as a unit of measurement, or act as rewards. By purchasing tokens, customers become part of an ecosystem.
That’s exactly what platforms like OpenSea and Coinbase do. They aren’t selling tokens themselves—they’re offering access to ecosystems and communities. That’s their product.
Since the technology is only beginning to show its potential, only a few participants currently validate this argument—but we still have some astonishing data. In the content industry, Web3 has proven better for creators than Web2. In previous articles, I’ve explained how NFTs work in the content industry, and the numbers support this logic. As highlighted in A16z’s recent crypto report, Web3 platform usage lags far behind today’s internet giants. OpenSea sees 2.5% usage compared to Apple Store’s 30%, YouTube’s 45%, and nearly 100% for Facebook, Twitter, and Instagram.
“When big tech adoption rates exceed those of the mafia, you know our economy has a serious problem.”
Looking at income generated across different platforms, NFTs offer creators an entirely new way to monetize directly with their fans. In 2021, the average payout per creator on OpenSea was $174,000, versus $636 per artist on Spotify, $405 per channel on YouTube, and just $0.10 per user on Facebook. What do these numbers tell us? Web3 may be small, but it's powerful. For the content industry, NFTs represent a new business logic that brings copyright into the digital world and ultimately rewards creators—and their communities.
The concept of Web3 fundamentally challenges how businesses currently operate—even how they enter the market—by shifting priorities. Traditional startups invest heavily in conventional marketing to attract and acquire new customers. Tokens offer a new approach: core developer teams don’t need to spend funds on traditional tools. Instead, they can use tokens to bring in early users. People join due to underlying incentive mechanisms. Early token holders are rewarded for their contributions when network effects are not yet visible or just beginning—whether they’re developers, community managers, investors, partners, or other supporters. Tokens turn early contributors into evangelists who bring more people into the network. This community-driven mechanism makes Web3’s early adopters far more effective than traditional Web2 sales or business development teams. Thus, tokens can be seen as equity with governance rights. When you buy a token—fungible or not—you join a community. In the future, tokenization will disrupt online go-to-market strategies.
When discussing ecosystems and tokens, I often hear this question:
“How do I know which ecosystem will win? What if I buy ADA, ETH, and AVAX, but the Algorand ecosystem ends up dominating?”
The answer regarding ecosystems mirrors the answer about business models. There’s no one-size-fits-all solution, but frameworks can be built. We must remember: cryptocurrencies are stem cells incubating their own ecosystems. Their architectural differences may give advantages for certain use cases while creating disadvantages for others.
I appreciate how Andreessen Horowitz’s Maggie Hsu described it in her article on Web3 mindset, tactics, and metrics: “The biggest shift in thinking is from being a planner to becoming a gardener.”
Web2 companies are guided by top-down visions, where founders (and to some extent investors) bear full responsibility for defining the vision, building the team, planning, and executing it.
In Web3, founders are gardeners. They create space for ideas to grow and help nurture what they believe will succeed. They provide initial governance structures—often via whitepapers—but ultimately optimize based on protocol usage and community quality. These ecosystems are far less hierarchical and more democratic, meaning more participants actively contribute to a project’s success. Many projects, including numerous DAOs, make distributed ownership a reality.
Let’s take publishing as an example. Will physical books disappear? Personally, I doubt it. Books are magical—they use language to create worlds, alleviate pain, offer hope, educate, manipulate, inspire, and comfort. Books evoke a sense of adventure or calm, using language as their sole tool.
“Language is the first metaverse. When I speak to you, you create a world in your mind—a book is like a token, granting access to the new world you imagine.” — Jamiel Sheikh.
This statement isn’t just philosophical—it carries relevant business implications worth considering. Is there really a need for alternatives to books? E-book sales are declining globally, while the physical book market remains stable. People will always read, and even as a Web3.0 enthusiast, I don’t believe Web3 negatively impacts the core publishing business. But the potential for alternative, additional creative outputs—and resulting revenue streams—is enormous. Authors are often thought leaders, peers, idols, and coaches—people worth looking up to and learning from. All these attributes form community foundations. Web3 presents a major marketing opportunity within the metaverse, offering alternative experiences, but DAOs determine how stories evolve—communities decide.
Future business leaders will face many challenges, but one task they must address is understanding Web3’s potential impact on their profits—and equally important, the potential opportunities it may unlock. The solution lies in focusing on ecosystems. Companies that provide the right ecosystem for their industry will gain unique opportunities to disrupt both themselves and competitors.
Ultimately, if today’s market leaders don’t want to fall behind or become irrelevant, they have no choice. This much is clear: OpenSea and Coinbase, to name just a few, are powerful Web3 brands that have internalized this potential and are already knocking on the doors of the content industry.
They may possess the technology, but until now, competitive advantage has come from owning communities and understanding people who create and curate content. Tokens are the key to unlocking immense potential. If these players build their ecosystems around creators’ needs, they stand a chance to be far stronger years from now.
Tokens are indeed changing the world. In Web3, successful tokenization lays the foundation for nearly every imaginable business model. Audius mimics Spotify, Sorare and TFC mimic EA, Livepeer mimics YouTube, Compound mimics large banks like J.P. Morgan, decentralized messaging services like KIN mimic WhatsApp—the pace of innovation is accelerating.
Will they all last forever? Of course not. But just like the ecosystems they’re building, some will survive. And those that do—alongside their early participants—will capture the largest share of this emerging domain.
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