Utility from day one is the key to long-term value and Web3 success
by Rupert Svendsen-Cook, CEO, Veloce
Utility has become the imperative factor in successful Web 3.0 development. Over the past five years, new decentralised platforms and services have arrived, supported by blockchain, challenging the status quo in an array of sectors from finance and sports to art and gaming.
But what is their longevity and why do some of them make it and others crash and burn?
There have been some great successes. There have been plenty of failures. Whilst that is the natural and rewarding progression of technological innovation, it has highlighted a gaping problem for so many: utility.
The relationship between utility in Web 3.0 projects and success is becoming clearer and clearer. Just like most things of value, people need to understand that it is useful. It requires utility to be valuable. That equation matters in the everyday and it matters with Web 3.0.
So, if utility is of such importance to a Web 3.0 project the question is twofold: how do you build utility? When do you build utility?
To tackle the first, you’ve got to make the token useful to the user. It should not be a stagnant asset but one that has a purpose, can support your interests in the project and ultimately be used. Underneath that, you are talking about token utility coming from two core elements of a project and its ecosystem: engagement and community. The two are interdependent and can both build and detract from utility if not working together.
User engagement is about understanding how the user already interacts with the platform, its services and beyond. Is this token or project actually going to support that engagement or will it simply be seen as an add-on? It’s why projects that see investors as customers – putting value above utility – miss the point.
A well-valued token should be built in a manner that reflects an understanding of the users engaging with the platform or project. In doing this you can better gauge how the utility of the token could improve their experience.
For example, in the case of sports and gaming fans, something they want to be able to do is have a say in how sports and gaming teams are run – to voice their supporting opinion on the direction of the team. So you’d want to build a token that has the utility to allow them to do so, perhaps for example, through offering voting capabilities on team management.
Therefore, to build genuine utility you need to create a token that engenders engagement and grows your ecosystem
That brings the second part of achieving utility into view: community. Successful utility is built by communities and that is central to the evolution of Web 3.0 .
When people use a token, you want them to do so because it is useful, not because it is mandatory. You want them to use a token as part of something bigger than just the token.
So, I don’t want a token to be the equivalent of an “I went to X and all I got was this lousy T-shirt”. I want a token to be something that brings you into the community and gives you access; gives you rights and gives you a stake in something bigger.
Taken together, user engagement and community, they make a token useful and build value. So, when do you have that utility?
I have seen so many projects kick off as empty shells. They kick off with grand plans but not too much behind them. Now, there is nothing to say that might be incredibly successful as the capital raised ends up creating the vision. But it is risky. My view however, and not an unusual one in wider society or general economics, is that utility, proof of concept and track record – the ‘meat’ – is helpful from day one.
The ability to understand something’s use, its purpose, and its trajectory, all underpinned by an existing and proven project that has been growing for quite some time is both reassuring but also valuable. To succeed users must know that their tokens are already built with value and utility from the get-go. Utility is King in the great race for value.