Inside Hexa
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Inside Hexa

The rise of embedded-web3 applications

Web3 is the ownership layer of the internet, not an evolution of web2 or a metaverse, either. It’s a new internet feature that allow users to own digital objects, value, and data. This will be integrated into the applications we use today, for the better.

In recent years, web3 native applications have been used mainly by tech-savvy users to trade crypto and NFTs, primarily for financial gain. We believe that in the future, everyone will use web3 features in the apps they use every day to own the value they create. It no longer makes sense for user-generated value to be stored in centralized databases when it is now technologically possible for users to own it.

Web2 applications will be upgraded with web3 features, becoming “embedded-web3 applications”.

Unlike web3 native apps, embedded-web3 apps are resilient to bear markets as users come from a value proposition other than speculation. We are confident that these apps will finally drive mainstream web3 adoption.

Why embedding web3 then?

Businesses and consumers won’t adopt web3 for the sake of it; they will because it enables powerful new benefits on both sides of the table.

Ownership finally aligns users’ and businesses’ incentives while creating new ways to grow. Because it’s now possible for users to own value on applications, they will want to possess more and more of their assets so they can control them, such as selling them. This creates stronger incentives for users to use applications, as they are now owners. Let’s explore some examples:

In an embedded-web3 shop, shoppers can own their loyalty points. This means they can resell their points to anyone on a decentralized market. This is also great for the brand, as customers have now more incentives to buy more to earn more points.

In an embedded-web3 social network, users can own their followers.

In an embedded-web3 game, users can own their skins and points.

Web3 makes ownership relevant because, as a user, you can use your assets anywhere you want.

Think of blockchains as giant public databases where value and objects are stored. This means that integrating web3 features enables applications to communicate with each other without writing custom code. Any application can leverage each other’s data, and this is where the magic happens!

Brands can do collaborations like never before. Users can use their loyalty points across multiple shops without complex integration with ERPs. This opens limitless marketing opportunities with no extra cost.

Gamers can use their skins in different games, so indie developers can leverage popular skins to create new immersive games with limited resources.

New social networks don’t need network effects to get started; they can leverage followers owned by the user to offer an experience from the start, enabling new social networks to emerge.

Big platforms have started to natively integrate web3 features, such as Instagram and Shopify last year. This means any application can integrate with them without integrating their APIs. Users can display their NFTs generated by any service (social networks, shops, games) on their Instagram profiles. Brands can sell products to specific token holders on Shopify.

No integration needed. Limitless possibilities.

Cookies are set to become obsolete in the near future, presenting an incredible opportunity to redefine what marketing should look like. People are increasingly demanding more control over the data they share with third parties, and we believe that web3 is the perfect platform to enable this new era of marketing. Let’s call it the “wallet-based marketing”.

We are confident that signing up with a wallet will become the new standard way to connect to any application in the future. With a connected wallet, users can choose which information and assets they want to share and use when they connect, while companies can leverage this new cross-application user persona to personalize their experiences like never before.

🔥 We will announce in the coming days a new company (#3f22) that is pioneering a new way to convert and retain web3 users.

These new growth opportunities will be taken advantage of by new web3 companies to challenge existing ones. The existing companies will need to incorporate web3 features into their apps to stay competitive. In either case, users will benefit and become owners.

For every type of application

E-commerce was the starting point. Loyalty programs are a representation of the value created by users for e-commerce shops, and should be owned by the user rather than the merchant. This is transforming how brands interact with their customers.

🔥 Cohort (#3f22) makes it easy for retail brands like Etam to offer exclusive experiences to buyers within their shop, thanks to embedded web3.

But there are many other use cases. What value do users create on the internet?

Gaming is also a great use case, so users can own their game assets. Giants like Sorare have already been built with this new incentive. New games such as Immortal Game (chess game) have also adopted the embedded web3 approach.

Social networks need to move away from a centralized approach that creates governance issues by design. Embedding web3 features could be the right approach to let users own what they post and their audience, while reinventing likes and moderation with new token dynamics. Protocols such as Lens and DeSo are being created to enable the next wave of embedded web3 social networks.

Marketplaces that rely on external resources to run could use tokenomics to power network effects and increase retention by giving incentives based on value created on the platform. Web3 features can enable a much deeper ecosystem, such as governance, on top of their platform.

We understand that educating users on a new technology is not easy. The most important challenge is user adoption. Applications must integrate web3 features by default to generate adoption. Users must learn by doing, just like any other core feature of a product.

Here is our take on the best way to integrate web3 features in current applications to maximize adoption.

Integrated as an abstract feature by default

Unlike in web3 native apps like Opensea, users will come to use your app not to trade tokens. So apps need to abstract concepts and build web3 features by default to drive real adoption.

Authentication & Wallet

The wallet is the central piece of any web3 feature; this is where value is managed and “stored”. In web3 native apps, users sign in with their wallet as it is the only identifier. But in embedded-web3, apps need to adopt a different approach.

Creating a Metamask wallet is very complex for most people. Apps need to integrate an app wallet into the current user account so all users have a wallet by default after they sign up with their email. This app wallet, managed by the brand, allows them to propose web3 features to all their users without the complexity of signing transactions. Think of it like a temporary wallet until users are educated enough to manage their assets themselves.

Of course, users should have the choice to sign in or connect their self-managed wallet (non-custodial wallet like Metamask).

Architecture of an embedded-web3 app

For example, Immortal.game allows users to “register with Metamask” but also with an email creating a default wallet in the background:

Gas fees is also one of the main friction on the web3 user flow today. Embedded-web3 apps should abstract gas fees for users and includes these costs in their business model. Gas fees should be viewed similarly to server costs for services like AWS, but for blockchains like Ethereum, Polygon, and Solana, which enable users to access this new internet capability.

🔥 At 3founders, we are working on a new company (#3f23) to help developers embed web3 features without introducing friction. If you’re interested in working on this topic, please reach out!

Users don’t need to understand crypto to adopt features, they need to understand what they can do with them. Remove complex terms like custodial/non-custodial, NFTs, mint, swap, token-gated that scare non-crypto people. Instead, use terms which explain the benefit for the user.

Leading brands like Startbuck and Instagram have understood that and use very common vocabulary and focusing on benefits.

Starbucks uses the term “Stamp” instead of NFT. Instagram calls them “Digital Collectibles”, Reddit refers to them as “Collectible Avatars” and “Vaults” instead of Custodial Wallets.

Conclusion

Embedding web3 into everyday apps will enable businesses to unlock new growth strategies and offer better experiences to users. The main challenge is user adoption. Successful embedded-web3 apps must meet three requirements:

  1. Web3 features should be embedded in applications with a purpose beyond speculation, such as a shop, game, social network, or SaaS.
  2. Built to onboard every user by default with a brand wallet integrated into their account. This wallet has a simple flow and easy-to-understand vocabulary. Users also have the option to connect their web3 wallet, such as Metamask.
  3. Unlock experiences with digital assets outside of the application.

Now is the perfect time to build something meaningful for people with the amazing new web3 possibilities. It’s show time for web3 utility — come build with us!

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