“We are no longer an NFT project.” — A recent announcement on the Doodle’s discord has stirred up a fair bit of controversy and highlights the challenge of making the transition from an NFT project to a Web 3 company.
With the infusion of venture capital at the height of the bull market, some NFT projects that made the transition include the likes of Yuga Labs, RTFKT, and Doodles. However, as the bear market set in, some of these organizations are struggling to lead their communities through the crypto winter as the fundamental premise of what it means to be an NFT project seems to be at odds with the bigger ambition of becoming a Web 3 company.
Web 3 is all about community and with that comes an expectation of transparency that is standard for our industry. While its easy to “build in public” as a community-led NFT project, the model often does not work for Web 3 companies that need strong leadership and a sense of direction.
To build in public means to have every buisness decision questioned by the masses and as a result, the organization is perpetually beholden to community feedback. Conversely, to build with a strong sense direction requires building in private or with a disregard for how the community feels about the leadership’s decisionmaking. Thus transitioning to a Web 3 company requires a level of centralization that runs counter to the community-led nature of NFT Projects.
This is the dilemma that many Web 3 orgs find themselves in. Community led growth works really well up until it starts to become a drawback that stifles strong leadership.
Perhaps the financialized nature of NFT projects is at the heart of the issue.
“We are not going to spend any resources appeasing those with financial motivations. We never have and never will.”
Many NFT projects live and die by the communities they have created and NFT communities today are really just a collection of investors.
Investors in NFT collections expect regular updates as a driving factor of their faith in a project. This is especially pronounced during a bear market when holders observe the value of their NFTs precipitously drop day after day and they need some hope to cling to.
During the bull market all that mattered was “Floor go up.” In order to make the transition to a Web 3 company, an NFT project needs to transcend a collection of JPEGs whose value is derived from floor prices. The project needs to become a company whith a mission and a vision. Only then can it create a loyal following that is not swayed by market fluctuations.
That is a real community.
To go from an NFT project to a Web 3 company is no easy task. Strong leadership and strong communities are both integral to the success of any Web 3 organization. Finding that balance will be the difference between the NFT projects who will perish and the Web 3 companies that are poised to survive the crypto winter.
As always, thank you for reading.
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