Reflections from Token2049: Navigating the Now and Imagining Web3’s Tomorrow
Introduction
In September 2023, Singapore hosted Token2049, one of the world's largest web3 conferences. More than 10,000 attendees from over 5,000 companies participated in Token2049, which featured over 450 side events.
The event was a resounding success (kudos to the organizers!), and Ocular was thrilled to be a part of it. We had the pleasure of engaging with brilliant minds in the space, and connecting with new and old friends in the community. Inspired by our learnings and interactions, we would like to share our key observations and takeaways from the event.
Getting Over the Hump of 2022
1) Greater regulatory clarity
We discussed this point in our Focal Point piece on regulations, but our interactions at Token2049 reinforced our views that we are making good progress on the regulatory front. The consensus at Token2049 was that these regulatory developments are positive for the industry - they not only provide clearer guidelines for projects to navigate the web3 space, but also foster trust in the system, encouraging users to be part of the community.
As with all other disruptive technologies, the developments in web3 have thus far outpaced the speed at which regulations are formulated. Think back to the early days of Uber and Airbnb, when it was uncertain if these apps would be permitted to operate. The concept of a sharing economy was relatively new and unfamiliar to most people (including policymakers), leading to questions on how to effectively oversee and regulate these peer-to-peer interactions. While not all concerns have been addressed, Uber and Airbnb have both worked closely with the authorities to establish their own industry and both apps have thrived in recent years. Similar parallels can be drawn for web3. We are still in the early stages, and there is much work to be done to achieve greater regulatory clarity. Nevertheless, we remain optimistic that once regulations catch up, there will be a surge in adoption rates, catalyzing the growth of the web3 ecosystem.
2) Asia is still a bright spot for web3 communities
Out of the 10,000+ attendees at Token2049, 80% came from outside Singapore and they represented over 120 countries. The scale, diversity and enthusiasm of Token2049 this year have cemented Singapore’s status as an epicentre for web3.
Many shared that despite the series of negative events in 2022, which mostly centered around Asia, the positive sentiment towards web3 and the community strength in the region remains unparalleled. It is arguably stronger than in Europe and the US, where regulation overhang has dampened enthusiasm. At Token2049, multiple self-organized NFT events took place with local communities, including those for Azuki, BAYC and Pudgy Penguin holders. While the NFT scene may not be as vibrant as before, there is still significant interest in the space, especially amongst the Asian communities. It is refreshing to see the continued community engagement and passion shown for NFTs, and this highlights Asia’s potential as a hub for future NFT consumers.
Singapore is not the only country in Asia that has established itself as a web3 hub. Prior to Token2049, Seoul organized Korea Blockchain Week to bring together the brightest minds in the industry to discuss, redefine, and celebrate the future of finance. Following Token2049, Tokyo will also host DCentral, the largest gathering of dedicated web3 builders and innovators in Japan.
Overall, we see this trend of web3 hubs emerging worldwide as a positive development for the ecosystem. It ensures the presence of physical support structures for community members, and promotes web3 in places that may be less familiar with it. It also presents an opportunity to develop web3 in accordance with local contexts and needs, ensuring that web3 is ultimately able to improve our lives and those around us.
Bringing the Next Billion Users - A New Mental Model
1) Building the bridge between web2 and web3
With the events in 2022 still fresh in our minds, it is easy to forget how far web3 has come along as an industry in just 5 years. In early 2017, the total crypto market cap was around $20 billion; today it exceeds $1 trillion. We started with Bitcoin as a reserve of value, to Ethereum as the world computer, and now we have sophisticated infrastructure (in L1s, L2s and middleware) which enables a wide range of applications from DeFi to NFTs to social platforms.
Many acknowledged the significant progress that web3 has made, but also emphasized that there is still plenty of room for growth. For web3 to achieve mass adoption, it is vital to educate and encourage web2 users to participate in the space. The sector will have to adopt a new mental model - shifting its focus from appealing solely to existing native web3 users, to promoting and making web3 understandable to a much wider audience.
There are ongoing efforts to bridge web2 and web3, and these efforts are gradually paying off. At Token2049, we learned about institutions embracing and promoting web3 development. For example, Starbucks is actively crafting their NFT strategy; Franklin Templeton has invested in a Bitcoin wallet (as part of their digital asset investment strategy) and has recently filed for a spot Bitcoin ETF; and Sony is partnering with web3 firms to set up incubation programs.
The converse is true as well, with many web3 projects looking to incorporate well-known consumer brands. This can be seen with Yuga Labs’ (creators of CryptoPunks) collaboration with Tiffany & Co, where CryptoPunks holders could purchase an NFT to see their pixelated characters transform into a real-life Tiffany’s necklace. The goal is to provide utility to the NFTs beyond just being a profile picture, and blending digital experiences with physical ones, also known as a ‘phygital’ experience.
More education is needed for users to fully embrace the web3 experience, but the bridge between web2 and web3 is progressively being built. We are excited to see more examples of web2 and web3 coming together and this will encourage more people to participate in the combined space.
2) Ongoing search for apps that can drive mass adoption
One way to attract retail users to web3 is by creating apps that can pique their interest and capture their attention. The sector is still in search of a ‘super-app’ that appeals to both web2 and web3 users, fostering mass adoption. At Token2049, discussions revolved around the essential elements required to develop this ‘super-app’, and we believe that it boils down to these three factors:
A convenient and user-friendly interface;
A reliable and trustworthy platform; and
A use-case that addresses existing pain points.
On the user interface, the app should be seamlessly integrated with existing platforms that we are familiar with. The deployment process, whether it is opening the app or signing up for an account, should be as frictionless as possible. Furthermore, the app’s interface should be easy to navigate, responsive and intuitive to sustain user interest.
Unfortunately, the series of events last year shook users’ confidence in web3. Web3 apps should serve as a trusted platform that upholds the required standards of compliance and governance. It will need to act transparently and put in place adequate safeguards to protect consumers.
Lastly, to retain users, the app must consistently address a pain point they are facing. At Token2049, the popular use cases cited were DeFi, including liquid staking, stablecoins and tokenizing real-world assets (be it bonds, commodities, real estate or debt); as well as gaming/metaverse plays featuring interactive non-player characters and user-generated content. These themes were also discussed in our 2023 thematic outlook. Regardless of the specific use case, the app will need to demonstrate that its proposed solution can resolve the issues that users are facing.
Conclusion
Token2049 served as a timely reminder that (i) despite being in the early stages, web3 has made significant progress in the past few years; and (ii) there is more work to be done to foster the growth of the sector, and there are exciting future developments to look forward to.
Ocular continues to be on the lookout for projects that are actively building in the space. If this resonates with you or if we missed the opportunity to speak with you during Token2049, do feel free to reach out to us at crypto@ocular.vc and we would love to connect!