Hi there, co-thinkers! ❤️
Today we continue a series of articles about how we see business in Web3, and want to show you possible “layers” of how to to build and monetize business in Web3.
Unfair Trade.
You might remember the time when you got your first job, or you can recall your most
remarkable interview. You might have felt lucky, but it wasn’t a win-win trade.
What employers did was exchange their resource – money for your resource – time. You
worked for the company in exchange for money. It is unfair and this is a one-way trade.
You can exchange time for money, but you will never exchange money for time. If you don’t
agree, try to find a shop where you can buy a one-minute extension of your own life. You can
find such a shop only in fiction movies and books.
Are Digital assets a key?
Such trades are natural in the existing world, but everything can change when we move to
the Web3 world. How is it possible? Where is the magic?
The name of the magic is Digital assets. When we hear about digital assets, we might think about cryptocurrencies, “shit coins”, and NFT which are easy to buy and impossible to sell. There are a lot of “scams” both in Web2 and Web3, and we tolerate when our savings and investment are being depreciated due to high inflation rates, but we get furious when cryptocurrency exchange rates fall. So, cryptocurrency itself is
not a magic pill, we treat Web3 more rigorously than Web2.
According to Investopedia.com, an asset is defined as “anything of value or a resource of
value that can be converted into cash”. Keywords here are “value” and “converted into cash”.
So, let’s start with our example above. When an employer and an employee sign an
agreement (smart contract) in Web3, funds are placed into the blockchain. Web3 makes it
possible to apply for loans backed by funds in smart contracts (future income). In this case,
smart contracts can be converted into cash and become digital assets for employees.
However, this is still an unfair trade, exchanging time for money.
Decentralization is the way to the harmony.
The most interesting thing appears when companies change their business model from a
centralized to a decentralized one and transfer their business to Web3. In this case, we don’t
have employees, we have partners with different roles. The companies start to share both
costs and profits with their partners and digitalize each asset in the business. What will
happen on a Web3 platform in this case?
For example:
- Recruiters – Recruiters bear the cost of bringing valuable professionals to the platform. In
this case, recruiters can earn money in different ways, such as access fees to their
professional database, or a percentage of transaction fees from the smart contracts.
Databases of professionals become digital assets belonging to recruiters and can be
converted to cash. - Sale representatives – sale representatives bear the cost of customer acquisition and
retention and bring valuable customers to the platform. In this case, recruiters’ Customer
Databases become digital assets belonging to the recruiters and can be converted to cash.
The company shares profit or revenue from the smart contracts with Sales representatives. - Value-added providers -– Coaches, career consultants, and trainers who provide different
services for freelancers and assist them in developing their validated professional skills can
also sign digital contracts with freelancers and get fees from their future earnings. In this
case, smart contracts become digital assets. - Outsourcing companies – An outsourcing company can bring together its core team plus
external recruiters, sales representatives, and value-added providers and share with them
both profit and costs. In this case, the digital assets of the company and the digital assets of
their partners can be united as one digital asset. All activities in this community become
digital assets. - Investors and liquidity providers – It’s possible to calculate the cost of the participants’
digital assets based on traditional financial models, this is a simple financial exercise. That is
why Investors and liquidity providers can also sign a smart contract with the owners of digital
assets and become their co-owners or creditors.
Each digital asset on the platform can be turned into a digital token. Digital tokens should be
transferred to the e-wallets of their owners, where earnings from digital assets also come. To
sell digital assets means to swap cash for digital tokens and transfer them from one e-wallet
to another.
In Web3, instead of a hierarchical organization structure, there is a flat-decentralized model.
Decentralization means converting suppliers and employees into business partners who
share both costs and profits with the owners of the organization. And trade between partners
is converted from “time to money” to “time to digital assets”. Digital assets, like an engine,
bring you money in the foreseeable future. Partners work for cash flow money, not for
one-time earnings.
Build your business like a house in Web3.
There are three ways to build and monetize business in Web3:
- Layer 0 – this is the layer of blockchain. The blockchain transaction fee is paid to network
validators for their services to the blockchain. Participants must pay this fee for network
stability and accessibility. It is similar to building a house from scratch. You should set up the
foundation and communications first. - Layer 1 – this is the layer of Business Application developed above the blockchain. Both
Business logic and data should be placed in the blockchain. It looks like the walls of our
house and walls should be based on the foundation. - Layer 2 – This is the layer of Digital assets. Blockchain digital token is a mathematical model
of assets in real business. If something is transferable and can be converted to cash, it
becomes an asset that should be digitized. It’s like the roof of our house.
Decentralization is the key to our construction. Blockchain shouldn’t exist under centralized
management. Centralization kills the value of Layer 0 for the community. Also, Layer 2 can’t
be under centralized management. Otherwise, there is only one digital asset – the centralized
company itself. It looks like a roof built from one large shingle. Such a kind of roof is
extremely heavy for the walls, costly to build, and highly unlikely to be repaired in case of
damage.
Layer 1, at the first glance, seems similar both for Web 2 and Web 3. But Web 3 shouldn’t
have a centralized backend… The centralized backend demolishes values of Layer 0 and
Layer 2.
And the icing on the cake … Let’s paint and decorate our house like a gingerbread house.
Let’s launch an internal token of the platform. When all participants start to pay inside the
applications by internal coin, it will allow them to have available liquidity on the platform.
Participants will exchange existing currencies for internal coins for doing business on the
platform. Smart contracts will be funded by the internal coin, and liquidity in the form of
external cash will be available on the platform for the participants.
But before we do this, our house should be finished. Otherwise, it is a scam. A token without business activities is a scam, the same as painting and decorating an unreal house is fiction.
Want to share your opinion?
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