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The post-consortia era: How enterprises are embracing Web3 structures

March 6, 2022No Comments

Now that the initial hype around blockchain applications and the prolonged blockchain “winter” that followed are behind us, we are now in the midst of a “spring” that is helping organizations reimagine how they deliver value. So much so that blockchain is expected to add $1.76 trillion to the global economy by 2030. according to PWC.

A significant portion of this increase is expected to come from business-to-business (B2B) implementations, which will take full advantage of the security, immutability, and optimization opportunities offered by blockchain-based transactions and relationships. With processes involving multiple partners, dozens (if not hundreds) of products, and cumbersome bureaucracy for almost any business process, it's hard to overstate how much companies stand to gain, especially when considering the emergence of more agile competitors.

But while small and medium-sized businesses (SMBs) are quicker and more agile in adopting new technologies and products, enterprise adoption is slow. Sales cycles are long, there are more gateways, and there remain strong incentives for multiple internal stakeholders to keep things the way they are.

Related: Today's Enterprise Blockchain: While Some Fail, Others Show Potential Value

Join the consortium

Part of the rise of enterprise blockchain comes from the growing desire of corporate decision makers to join forces with others to develop and work on similar solutions. Everyone hoped that more entities working together to develop and manage proofs of concept, or pilot phases, could make developments more valuable. These efforts have been through membership in larger collaborative organizations, or "old world" consortia. We are starting to see the foundation of several blockchain consortia designated for specific industries such as RiskStream and B3i.

Existing industry consortia and governing bodies have also begun to establish designated networks for their members, such as the attempt within the GSMA for the mobile space. In 2019, 92% of executives who responded to the Deloitte Global Blockchain Survey said they already belong to a consortium or plan to join one.

Related: Private, public and consortium blockchains: the differences explained

But looking back, it seems that enterprise blockchain production deployments have one thing in common: very few of them are consortium-led. Sure, some companies have created ad-hoc consortia, usually representing interested players from a given ecosystem to drive early adoption and reach early consensus (Mediledger and Tradelens are two examples of this). But, the bottom line is that the solutions were developed and implemented by for-profit vendors and adopted by for-profit companies without being endorsed or approved by industry-wide consortia every step of the way to implementation.

The rationale for industry silos is diminishing

Companies that want to experiment with technology, build use cases, and gain traction often don't do so on public chains due to their limitations, particularly those that are inclined to keep their operations in-house and private. Before interoperability became an industry focus, developers were understandably forced to develop blockchain in isolation. They were chartered, owned, or governed by trusts.

But now a decade has passed and consortia are still tied to privately-permissioned deployments. The enterprise blockchain space simply cannot ignore evolution. Greater interoperability and the incoming wave of Web3 mean we need to reassess the critical role blockchain consortia play in the equation.

Will DAOs replace consortiums in the enterprise space?

For businesses, new incoming infrastructures and the role they play decentralized autonomous bodies (DAO), leveraged by smart contracts and governance protocols, could also replace blockchain consortia as the focal point of the industry. DAOs have even caught the attention of more mainstream investors, including billionaire Mark Cuban, who called them "the ultimate combination of capitalism and progressivism". "The future of corporations could be very different as DAOs take over legacy businesses," he said. tweeted in May, "if the community excels in governance, everyone shares the benefits."

Venture capital firm Andreessen Horowitz, or a16z, has also led multi-million dollar fundraising rounds both in individual DAOs and in companies that support the creation of DAOs. However, DAOs only make sense in specific contexts and not all fields of companies seeking alignment can execute on this notion. Look out for some very exciting news in this field in 2022.

Related: DAOs are the foundation of Web3, the maker economy, and the future of work

So where can consortia best serve? Defining the standards, not the network

Agreeing on a unified data model, for example, would represent a huge step forward for most ecosystems. And certainly not impossible. When Contour and GSBN (thought to be competitors) collaborated on a model to drive digitization in the global shipping industry, this positively boosted interoperability for users of Contour and GSBN solutions. This is where consortia play their role in giving corporations and businesses the ability to work collaboratively and achieve a common goal.

Industry consortiums, with great efforts, have no real way to compete with the insane pace of the technology industry that is constantly creating solutions, platforms and networks. If they choose to stick to defining exactly what the stack should look like, they are likely to become irrelevant very quickly. If they choose to define standards that can get any stack adopted for transformation, they will create value for the businesses they serve. Voting and reaching a consensus on features or a joint roadmap will be done without intermediaries in the Web3 era.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.

The views, thoughts, and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ruth Levi Lotan is vice president of sales and marketing at ClearX. She is a partnership enthusiast with more than five years' experience in business intelligence and strategic consulting, working with leading companies with a global presence. Her experience also includes more than three years in financing and impact investing, including business development efforts with institutional investors and the government sector. Ruth was also involved in the work around Israel's first Social Impact Bonds (SIB), a mechanism for unique cooperation between sectors that do not normally align.