Web3 a hot topic at SXSW despite bear market and declining interest in NFTs

Giant rabbits wearing trendy outfits standing next to cartoon characters with rainbows coming out of their mouths lined the streets of South by Southwest (SXSW) last year. This is because two non-fungible token (NFT) projects, Doodles and Fluf World, Dominoes SXSW 2022.

However, these projects were nowhere to be found at SXSW 2023, which shows the lack of interest in NFTs this year. However, this shouldn't come as a surprise. With cryptocurrency prices down, along with decline in NFT prices and trading volumes, very few projects seem to be focused on digital collectibles. Instead, SXSW 2023 was invaded by major brands and consulting firms bragging about the promise of Web3.

Brands discuss Web3 strategies at SXSW 2023

Avery Akkineni, president of Vayner3, a Web3 consulting firm founded by Gary Vaynerchuck, told Cointelegraph that Web3 is transitioning from its moment of novelty to strategic implementation, which is why the technology has become a hot topic for developers. business leaders at SXSW this year. She said:

“Web3 technology can potentially disrupt many industries, from finance to healthcare to social media, by enabling more secure, transparent and efficient systems. This increased interest in Web3 is crucial because it signals a shift towards the next era of the Internet, which is more immersive, personalized and accessible to users."

Akkineni added that he believes all brands should take the time to understand Web3 and devise strategies to achieve it. “Brands will take advantage of Web3 in a number of ways, from creating community-owned channels to implementing blockchain-based supply chain management systems,” he said.

To put this into perspective, Vayner3 and cryptocurrency exchange Coinbase hosted a brunch during SXSW that included a panel discussion titled "Web3 and the Future of Customer Engagement: How Brands Can Stay Ahead."

Rachel Weiss, vice president of L'Oreal Bold Ventures, L'Oreal's strategic venture fund, stated during the panel that Web3 is allowing the beauty industry to enable "beauty ownership." She said:

“What does Web3 mean for the new creator economy around beauty? What are the new expressions that will be built around beauty with this new technology? And what is it like to be a fan of a brand? These are all things that I think Web3 will enhance. And it will put what we build at Web2 on steroids with a new way to engage for the next generation of beauty consumers.”

It is important to note that Bold Ventures recently announced an investment in Digital Village, a US-based startup that helps brands create digital identities and assets in virtual worlds. In addition, NYX Professional Makeup, a subsidiary of L'Oreal, integrated into The Sandbox last year to feature voxelized makeup looks on avatars, adding to the concept of consumer ownership.

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However, while Weiss expressed excitement about Web3's potential to transform the beauty industry, David Lee, head of Samsung Next, noted during the discussion that Samsung's portfolio companies and partners are still waiting for a "ChatGPT moment." " to outperform Web3. He said:

“I think ChatGPT was an interface that people just understood, but that was after years and years of fundamental research, marketing, and experimentation. I think the same thing is happening right now. We're seeing a lot of experimentation, particularly among brands, to get involved in Web3. But I don't think we've found that ChatGPT moment yet."

However, this has clearly not stopped companies from participating in Web3 activities. For example, Coinbase had a large presence at SXSW, with a strong focus on its recently launched wallet as a serviceor WaaS, product.

Leonard Law, product lead for WaaS at Coinbase, told Cointelegraph that WaaS was aimed at solving one of the key pain points for adoption: wallets. Law noted that it was important to showcase WaaS during SXSW due to the large presence of Web3. “WaaS at SXSW was all about connecting the right technology with the right brands and helping these brands build strong, direct relationships with their customers,” he said.

Law explained that WaaS simplifies the Web3 wallet onboarding process for end users, as a username and password are the only items needed to gain access to Coinbase's Web3 wallet. "Simple onboarding will lower the barrier for users to join the chain, opening up Web3 experiences to the masses."

Several official SXSW 2023 panels also focused on Web3 initiatives. For example, there was a featured session titled "Building an Open Metaverse" that included a conversation with Timmu Tõke, CEO and Co-Founder of Ready Player Me, an avatar platform focused on interoperability.

After the panel, Tõke told Cointelegraph that the metaverse is an important part of Web3 as many people spend time in virtual worlds. He explained that brands are interested in establishing a presence in the metaverse. “We have seen people make billions of dollars a year selling virtual assets in games or in the metaverse. Web3 plays an important role because it enables a set of technologies that will allow consumers to finally own their virtual assets,” he said.

NFT presence was small but focused

Tõke said that NFTs are likely to play an important role for Web3 platforms in enabling consumers to own digital assets. He shared that brands have become cautious about launching NFTs due to current market conditions: “They don't want to attach their brands to something that is perceived to be declining in value or popularity. We saw this mindset when the market crashed, where many brands told us they liked the metaverse concept but didn't want NFTs involved."

Although this may be, Nicole Behnam, founder of marketing agency Beyond Media, told Cointelegraph that while not many people were talking about NFT at SXSW this year, communities were still flocking due to the previous NFT hype cycle. :

“Existing NFT communities and collections still host events, activations, and panels for their holders. We've been talking about the utility for quite some time and we're finally starting to see what teams are following."

Natasha Hoskins, co-founder of decentralized autonomous social organization (DAO) Boys Club, told Cointelegraph that the DAO is interested in how Web3 technology can be applied to real-life experiences. She explained that Boys Club launched a physical and digital NFT publication with Boys Club Zine, the group's magazine.

“The conversation about NFTs has matured since the PFPs [profile pictures] to one around practical and functional utility. It's less conspicuous, therefore less visible in a noisy environment, but this change is important for NFTs to become a credible integration into everyday applications," Hoskins said.

Enthusiasm for Web3 despite market conditions

All things considered, it's remarkable that Web3 had such a large presence at SXSW this year, given the current market conditions combined with the Silicon Valley bank collapse that took place on March 10, the first day of SXSW 2023.

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Tara Fung, co-founder and CEO of development company Web3 Co:Create, told Cointelegraph that the mood at SXSW for the first two days weakened:

“Personally, I found it difficult to be present and engaged when we were grappling with questions about where a significant portion of our operating capital was and whether we would ever get it back.”

However, Fung noted that word spread on March 12 that Silicon Valley Bank depositors would be protected, which changed the environment for SXSW. “We are starting to see more of that euphoria and enthusiasm that SXSW is known for,” Fung said.

Regarding the crypto bear market, Law explained that developers see bear markets as a great opportunity to build: “This is what continues to generate a lot of excitement in the space.”