X2Y2 Twitter Space: Web2 Enters the NFT World

Author: X2Y2

Host (X2Y2): @alex_pengfei

Guests:

Simon - Co-founder of Dr. Ji @drjiclub

AK - Manager of Angrycat @0xAK_01

Face Bro - Founder of HootLabs @0xFaceBro

Alex: Today's topic is how some well-known Web2 companies are entering the NFT market. If anyone finds something interesting during the discussion, feel free to ask questions during the Q&A session after the guests finish speaking. Our Space is about to begin. I'm very pleased to invite several outstanding guests. I'm your host, Alex, and welcome to this episode of X2Y2 Space. Our theme is Web2 entering the NFT world. Please introduce yourselves.

Dr. Ji: I'm Dr. Ji, Co-founder of Simon. I'm very happy to share with everyone.

Alex: Recently, Dr. Ji has been in high demand. Anyone who has traded NFTs knows this is a very good project, as I have participated in its launch. Initially, some people may have maliciously fudged it, but later the project team proved to be very capable.

OxFaceBro: I'm very happy to participate in this Space. I'm OxFaceBro, Face Bro.

Alex: You should have entered the Web3 NFT world quite early as a Web2 or related project, and you have done very well. I remember when you launched, many people were skeptical about Web2 projects. However, Hootlabs' launch and subsequent performance were very impressive. I'm very glad to invite Face Bro to share with us. The first question goes to Dr. Ji: Why should Web2 companies enter NFTs? Many Web2 companies that come to NFTs have very good reputations and revenues. What motivates them to explore the NFT world?

Dr. Ji: I think this is related to the positioning and development of the company, including its planning. Different companies have different considerations. Not all companies will attempt this, but many are willing to try, especially those with strong innovation and reform motivation. In such a significant generational shift as NFT or Web3, any capable and visionary company will not ignore it; they just participate in various ways.

Technical companies may participate through hardware or underlying technologies, whether in the next generation of operating systems or hardware networks, design, chips, or VR/AR in the broader Web3 context. For consumer-oriented companies, NFTs are a great entry point because they inherently have a certain consumer attribute.

Of course, many native Web3 players may see NFTs as investment products, but often they are also consumer products. Whether purchasing images, music, or various forms of NFT carriers, they actually align quite well with consumer-oriented companies and serve as an important medium for these companies to enter Web3. It's quite natural unless you determine that your users will not migrate or will migrate very slowly, in which case there may be no need to attempt this. We see many such companies; for example, Wanglaoji registered a series of trademarks related to the metaverse early on, and Ji Universe and Ji Culture have made comprehensive layouts, so it's not surprising that they collaborated with us to issue NFTs.

As a Guangdong company, this kind of reform and innovation often leads the way, and their determination to develop towards Web3 is also very strong. The entire system is researching how to reach younger users and enhance influence among the next generation of users. These are significant topics, as extending the brand's influence and continuously consolidating market position is crucial, and NFTs are an important medium.

Alex: I think that's very reasonable, especially the mention of consumer products. A classic and well-known example that comes to mind is Moutai launching an ice cream. Why did Moutai launch ice cream? Because Moutai's target users were originally middle-aged and older individuals in their thirties and forties, and young people rarely have the opportunity to access high-end liquor or premium liquor.

Moutai, as a consumer product, aims to reach younger audiences outside its original target user group. Capturing young people means capturing the future, so they chose to launch Moutai ice cream, a non-profitable venture, to reach younger consumers. I think many consumer products follow the same logic you mentioned earlier, choosing to enter Web3 and the NFT market, using NFTs as a concept that easily breaks boundaries to expand their target client base and ensure lasting competitiveness.

We know that Web3 tends to attract a younger demographic, and this target group is more willing to embrace new things compared to slightly older or more conservative individuals. Therefore, I strongly agree with your points about brand image and target user groups. What does Face Bro think about this issue? Why should traditional Web2 companies enter NFTs? What are the biggest benefits?

OxFaceBro: Simon just discussed this from the perspective of consumer companies. We are more of a traditional internet company; Hootlabs is associated with Inke. We see a significant background for NFTs. Inke has made a strategic adjustment this year, fully entering the metaverse. Web3 is essentially a foundational mechanism related to identity and assets in the metaverse, and NFTs are a crucial infrastructure within the metaverse. Based on this background, we established the Web3 brand Hootlabs.

The purpose of NFTs may be related to the broader context of the metaverse. Our release rhythm and strategy, such as issuing a Pass in June, may be a landmark event in our entry into Web3. Holding our Inke Pass NFT can unlock all subsequent Web3 and metaverse project tokens, as it serves as a key. Later, we will conduct airdrops and Free Mints for other NFT projects, which may be a reason for our traditional internet company to enter NFTs.

In contrast, other internet companies, such as Momo's OnePlanet or CheersUp, have reached a certain bottleneck in traditional Web2 growth. The mobile internet has developed for ten years, and there is an urgent need for a new track to expand the company's business and development space. Web3 may be a long-term and broad track for the next five to ten years, which will attract many traditional Web2 internet companies to enter Web3.

Issuing NFTs is just a basic standard action for internet companies. For example, if we look at several internet companies issuing NFTs, they treat them as Pass cards with certain rights. Everyone is continuously planning to launch other series, not just NFT projects, but also in social and gaming tracks.

We issued Pass cards and a PFP series in response to NFTs. This month, we will also launch our first Web3 social metaverse product, which may be an interpretation of how traditional Web2 internet companies enter Web3 and NFTs.

Alex: I understand. I think that's a very good perspective. Face Bro's project represents a traditional internet perspective. I used to work in a Web2 company, specifically in traditional finance, and many of the traditional finance clients were internet clients. So I clearly see that many internet companies have struggled to regain their previous growth after entering a downturn. This is also related to the golden age of the internet in China over the past decade. When the golden age passed and winter arrived, many internet companies were unprepared for how to face this winter, focusing more on competing for existing market share rather than stepping out to explore new territories. This is a different perspective.

Of course, every company's style and strategy are different, so we can't say one is better than the other. But at least from my perspective, I think Web3 or the NFT field is a very good and positive attempt. I'm very pleased to see companies like Hootlabs making such bold attempts. We look forward to it; perhaps after the next round of reshuffling, there will be a new wave of champions among internet companies.

The next question is, how do you view NFTs? Will they become a standard in the future world? For some companies, will they use NFTs as a kind of basic infrastructure, like employee cards or various documents within the company? Do you think they will become essential items at the company level, or will they remain more in the realm of consumer products?

OxFaceBro: Let me share our understanding of NFTs and why we believe they may become an essential infrastructure for future internet development.

From the broader perspective of the metaverse, there will be characters, identities, avatars, land, and other assets. In Web2, user data and assets may exist on centralized servers of related companies. If that company, product, or platform shuts down due to regulatory reasons or other issues, the assets will be completely lost. How can we ensure that users' assets truly belong to them and not to any platform, avoiding loss for various reasons? NFTs serve as a medium to carry user assets.

From this perspective, the future metaverse will allow all other items or elements to belong to users, and NFTs are the most direct way to carry and mediate that. Therefore, from this viewpoint, NFTs will definitely become standard for future metaverse or internet companies. I believe that in this regard, the role of NFTs is crucial.

Earlier, Alex mentioned another point: will NFTs become part of company organizations? Recently, SBTs (soulbound tokens) have become quite popular. They may not circulate in secondary markets but serve as a certificate belonging to the user. They may directly record users' offline information or data on the blockchain. Holding an identity-related NFT, like an employee card, can directly represent oneself, and this belongs to the individual, not to others, and cannot be traded.

The perspective raised by the host is excellent. We can see some projects working on this, exploring how to combine users' off-chain information with on-chain information. This is likely a trend. Projects like DID (Decentralized Identity) or SBT are thriving in the market, so I agree with the host's viewpoint that NFTs will increasingly become basic infrastructure in projects or within the internet, or organizational infrastructure within companies. I believe this trend is indeed happening.

Alex: I think Face Bro has also mentioned something new, which is SBT. Recently, Binance has launched a new SBT, and everyone can open their Binance accounts to claim SBTs. NFTs indeed have many applications beyond the simple images and PFPs we see now. We can't even define them with a single term yet, as they have only been popular for a year, so there are still many aspects worth paying attention to.

Entering this field earlier certainly gives companies more voice and makes it easier to explore new play styles, essentially becoming OGs in the industry. I believe that the returns from time spent in this field may yield unexpected rewards. What does Simon think about this? Should external companies view NFTs more as investment products, or will NFTs become an essential necessity in the corporate world or our daily lives?

Dr. Ji: The future will determine how long this takes. I agree with Face Bro's viewpoint. If we look at a sufficiently long future from a trend perspective, NFTs will essentially be an important component of Web3 or metaverse infrastructure. The original definition is broad; it is not just a consumer product or an investment product. Many forms of NFTs are used for tickets, certificates, including the recently discussed non-transferable NFTs and tokens like SBT, which broadly count as various manifestations of NFTs.

The transferable and value-bearing parts are currently more focused on, possessing certain investment and consumer attributes. They play a role in confirming identity, property rights, and the combination of virtual and online relationships. We mention soul binding, which is equivalent to constructing on-chain identities and souls. These applications are very broad, and from a functional perspective, there are many functions. Therefore, in the long run, NFTs will definitely become a level of infrastructure.

Of course, this does not preclude the existence of various types. SBT continuously builds these relationships, indirectly generating value, including secondary derivation of credit and loans, which is the value of credit economy and on-chain finance. Currently, the popular NFTs are consumer and investment types, which are relatively easy to understand. They are essentially tradable assets, and certificate types may prove the value of asset attributes, which can also be directly traded. There are various development paradigms that can provide space for everyone to grow. The future use cases and importance of NFTs in the entire Web3 space are very high, to the point that later on, people may not specifically mention them because they will have become a given.

Alex: Thank you very much for Simon's sharing. The future applications of NFTs may be things we haven't planned clearly yet. At the time, we couldn't foresee how smartphones would become widespread or how mobile payments would proliferate, but at the moment of their popularization, everyone understood it instantly, and the speed of adoption was so fast that we can no longer live without them. This is something to look forward to.

AK: Hello everyone, I'm from Angrycat. The host just mentioned the development of NFTs, and I personally have a very optimistic view of the future of NFTs, including game items and personal certifications, as there are more and more scenarios where NFTs can be used.

TwitterScan is about to issue a domain for NFTs. If it can be more widely adopted by NFT players, it will undoubtedly make it easier for more Web2 companies to target Web3 users based on their domain names. As the guests shared earlier, NFTs are indeed a great medium.

Alex: The next question is, what different play styles do you think Web2 companies will have in the future? Not just limited to NFTs, there may be many games, and even some Web2 companies like Ant Financial are very suitable for doing DeFi. In China, everyone uses WeChat, while abroad, people may use Facebook, Instagram, and WhatsApp. What different play styles do you think will emerge, and which fields might they enter? What other companies do you think might come in?

Dr. Ji: The two questions just now intersect here. Many companies will enter this field, and those looking to layout in Web3 or the metaverse will inevitably touch this area. However, the ways of participation may vary widely. I also look forward to traditional gaming companies entering Web3. If they can utilize existing capabilities in Web3, it may not be sufficient to support the entire game operating on the blockchain. If they can make good combinations with excellent production and a sound economic model, it may revolutionize the asset layer of original games. A significant issue with traditional games is excessive centralization and serious inflation of game assets, which deprives players of their rights.

The gameplay of gaming companies entering this space will focus more on this aspect. I know that some major companies are already developing related projects, so we can expect to see relevant games in the near future. Because from an imaginative and practical perspective, the metaverse itself is a game, there will definitely be a large number of gaming companies and metaverse companies entering the field, and more consumer-oriented companies will participate by creating cultural NFTs and brand NFTs to convey their corporate culture and stories.

In traditional fields, there are many cultural and creative brands, including methods and means of shaping high-end luxury goods. We can expect to see such operations and initiatives emerge. We can see that after some companies migrate, they will also create NFTs as a national phenomenon or high-end brand, elevating the overall style and even shaping the concept of luxury goods. We will see these new play styles gradually emerge, and we are also making efforts in this area. Many tech companies are entering in various ways. For example, as Face Bro mentioned, Inke is entering through the metaverse user ID Pass. In the future, there may be many other play styles.

I believe every industry will do what it does best based on its own industry rules, combining the minimal cross-border costs and breakthroughs available in Web3 to bring in many new play styles in the NFT and Web3 space.

Alex: I think that's very well said. I see someone raising their hand. If you want to echo, please wait until the guests finish speaking. Let's hear AK's perspective, as AK represents a more native community. What do you think about this? What play styles might emerge when Web2 companies come in? What companies might enter in the future?

AK: Many Web2 companies may be willing to be builders in the entire industry. There are two types: one is willing to issue NFTs themselves, and the other is primarily investing in the entire industry. Many internet companies prefer to invest in the foundational infrastructure of Web3 because of their large scale. In the future, they may try this way in Web3 for a while, and once the scale of Web3 reaches a certain level, whether in terms of compliance or the number of players, they may enter the Web3 field as project parties.

Alex: What different play styles do you think there might be? Because right now, everyone sees NFTs, but what do you think the future holds? What types of companies might we see in the future?

OxFaceBro: Since we are in the internet industry, it's not just about the future. I have many friends and other internet listed companies around me, and everyone is preparing to enter Web3. The ways of entry are indeed different. Compared to their original businesses, they may enter from a familiar field.

As Simon mentioned earlier, some gaming companies may first enter Web3 through the gaming track. For social companies, we may be more inclined to enter from the social track. I find that internet companies, especially listed companies, are entering Web3 with a long-term perspective.

Many Web2 internet companies, including Dr. Ji, believe that projects with backing are issuing NFTs to make money. However, traditional Web2 companies issuing NFTs are more about branding or demonstrating their determination to enter Web3, rather than issuing small images for profit. We see some excellent internet companies doing social projects and gaming projects beyond NFT projects, focusing on how to bring more Web2 users into Web3, rather than just the currently small Web3 user base.

Currently, we can see that Elon Musk's monthly active wallet has only two to three million users, with less than ten million users each month. This portion of users in the Web2 world is very small. Some very experienced players from Tencent's Crossfire gaming team are also involved. When we plan projects, a crucial point is how to reduce the cost for Web2 users to enter Web3, how to lower the threshold, and consider the differences in customer acquisition and final conversion.

It may not be necessary for users to first have a MetaMask wallet, pay gas fees, or own an NFT to enter the scene and play to earn. We need to allow users to come in with low or no thresholds. At some point, we can add such transitions, possibly with something different from the platform. Initially, users may not perceive it; the experience may be similar to traditional Web2 products. At some point, it may not be, as NFTs can be traded and circulated. Traditional Web2 companies are considering this when planning their layouts. Everyone is looking at the long term, not just the current chain games, which are often Ponzi schemes. Everyone is thinking about how to bridge Web2 and Web3.

There is a saying in the industry about doing it in a Web2.5 manner, where the product experience should be better than Web3. These traditional Web2 internet companies can bring this advantage in, allowing Web2 users to transition smoothly into the Web3 world from the perspective of traffic or product usage thresholds. This is something I see happening.

We previously also created Web2.5 products. For example, the top gaming team mentioned earlier will launch a fantastic GameFi 2.0 product by the end of this year.

Alex: I'm very much looking forward to your social product because I sometimes look at social products and find that they have various issues. The biggest problem is that they cannot allow people to enter at a very low cost or threshold. This is not just a social issue; it's a problem for all Web3 projects. How to attract newcomers is not about competing for existing users. I think this is a challenge and a pain point. I hope that over time, we can break through these barriers, and I'm very much looking forward to your products.

The last question is relatively open-ended and very much in line with what Face Bro just mentioned. It seems that there is a thin membrane or cell wall between Web2 and Web3, a thick barrier. Many people find it difficult to transition smoothly from Web2 to Web3. I also recall my own experience of jumping from a Web2 company to Web3, which took considerable effort and time to learn before I could enter smoothly. I had a mentor who had been in Web3 for two or three years, giving me guidance and advice. So I'm quite curious about how everyone views this phenomenon: it seems that people from Web2 have difficulty entering Web3. Face Bro, could you share your thoughts on this?

OxFaceBro: I think we can look at this from two aspects. As Alex mentioned, there is a product-level barrier to using Web3 products, and there are indeed many inconvenient aspects.

Web3 has many excellent features, such as decentralization, where all assets or data belong to the user. However, you must have a decentralized wallet, which involves mnemonic phrases and gas fees. This is an advantage of Web3, but it also brings a certain operational barrier. From a product perspective, how can we solve this problem? We believe that when users enter the platform, they should not need to log in or generate mnemonic phrases initially. We can help users automatically generate wallets within the product. To ensure user experience, we should try to shield the wallet layer as much as possible when users are not operating assets. User login and registration should directly generate a wallet stored locally in the app. Only when users need to operate assets should we inform them that their wallet is already local and guide them to remember their mnemonic phrases. Operating assets will require some signature interactions and gas fees.

Until users reach the asset operation level, we can completely eliminate this barrier. I think this needs to be considered from the product experience perspective: how to lower the operational threshold for users and make this cell wall as thin as possible. On the user cognition level, they need to understand that Web3 indeed has unique advantages. I also talk to friends around me about the differences between Web3 and Web2. In Web2, data is created by users, owned by platforms, and distributed by platforms. In Web3, data is created by users, owned by users, and distributed by protocols, not belonging to any platform.

Many friends around me say that their data seems to be exploited by many internet products for big data manipulation or commercial monetization, which has nothing to do with them. But this isn't particularly painful. Returning data to users sounds reasonable, but it isn't a particularly painful point for them. It may feel fresh, but its relevance isn't very strong. The time needed for cognitive understanding may be longer, requiring a longer cycle or a new Web3 innovation to help users realize that the Web3 world is far more exciting than they previously imagined.

Before NFTs existed, the user base of Web3 was even smaller. The emergence of NFTs and the acquisition of such assets by many influencers and celebrities on social media have driven ordinary users to follow suit and explore these assets.

This phenomenon may attract a wave of users due to the perceived benefits and interests. I believe the entire track needs more innovation and play styles to bring more Web2 users into Web3. This is an inevitable process, and the entire cycle may be relatively long.

Alex: Thank you very much. I think you've covered everything comprehensively, so I won't echo. Simon, how do you view the high barriers between Web2 and Web3? Do you think there are any solutions, or do you believe this is an insurmountable issue?

Dr. Ji: I believe that cognition does take time, and accepting new knowledge and concepts requires a process of popularization. The transition from Web2 to Web3 is a generational change. It's not just about whether Web2 should move to Web3; it's a process of the entire society transitioning to Web3. So it's just a matter of time; the barriers will eventually be broken.

What we want to ask or express more is that if you want to reach Web3 faster and understand it better, there are a few ways. Alex, your own experience tells you that either your cognition and learning are in place, or you collaborate with experienced, resourceful individuals who have relevant experience in this field to facilitate the transition, which may speed up the process. This process will involve the issues Face Bro mentioned, as there may be cognitive barriers and pain points in recognizing the transition process. Therefore, when designing business models, we can consider how to make your transition smoother and more successful.

On one hand, it is essential to combine your business's strengths and highlights. This is a natural thing; there must be an inherent attractiveness to draw people in, with certain advantages and characteristics.

On the other hand, we should find ways to lower the cost of users touching and using these things. I particularly agree with the approach Face Bro mentioned. I also suggest that many Web2 companies transitioning to Web3 adopt similar methods: initially, let consumers or users experience a seamless change. When certain aspects provide rights or ownership as positive stimuli, we can then spark interest in related things. I believe interest is the best teacher.

To give an inappropriate example, if I play a game and earn something, I may not initially care or investigate whether it's an NFT or delve into its relationship. However, if one day it suddenly appears on OpenSea or the NFT market and trades at a decent price, that may attract me to pay attention and explore how to extract value from it. If there is interest or benefits guiding you through this process, it may be more effective than facing a pile of overwhelming information and seemingly unreliable mnemonic phrases that completely contradict the original Web2 user habits. We can set those aside and allow users to transition smoothly, and when something piques their interest, we can use that moment to educate them on the more challenging aspects. I also strongly endorse this approach.

Using interest and appropriate benefits to guide users to realize the significance and value of Web3 to them, and then complete a certain level of learning and understanding, is an essential process.

Alex: Thank you very much. I think this is a great discussion from the learning perspective. It is indeed very necessary to have self-motivation and find suitable learning paths during the ice-breaking process, which can greatly help in understanding.

AK: As the two guests mentioned earlier, my thoughts are quite similar. My impression is that Web2 people coming to Web3 are often unclear about what products to invest in. If we convert each product into RMB, it's still not cheap. It requires spending a certain amount of money to invest in something they don't fully understand, which may lead to a more observant state. As mentioned earlier, I also agree that if there is a product that allows for a smooth transition into Web3, it would be great to receive NFTs or other items from elsewhere without realizing it, only to discover that these items have value and can be sold in the secondary market. This would be a significant stimulus to attract them to Web3.

As for Web2 companies, I believe it's a process. Most companies are currently in a wait-and-see state. I think as the Web3 field grows, many Web2 companies will enter Web3 as pioneers, whether for investment or as project parties, which may lead to more Web2 companies entering Web3, regardless of their motives.

Alex: All three guests have provided comprehensive insights. In summary, the process for every company or individual entering Web3 is certainly a learning journey from zero to one. There may be shortcuts, such as having someone guide you or hiring employees who are already in Web3, or having mentors in Web3. However, it also requires self-motivation or a sense of the concept; you can't just wait for others to lead you in. This is a very challenging process.

Today, we discussed many topics, including how to enter Web3, why Web2 companies should come to NFTs, and some future games and social play styles. Time is almost up. If there are no further questions, we will conclude today's Space here. Thank you once again to the three guests, and I hope to have the opportunity to learn and communicate with you again next time.