The private sector is only scratching the surface of blockchain technology’s transformative potential. Traditional businesses need to start adapting to Web3 or risk getting left behind.

The new internet has arrived

Web3 isn’t just a buzzword — it’s a radical new paradigm where everyday people can not only experience and contribute to the digital world, but also directly and securely own part of it. Beyond Web3 native startups, this technology offers a range of benefits to Web2 companies that can help ensure their continued relevance.

While many major Web2 corporations are already exploring how to best integrate the blockchain, it remains early days for private sector Web3 adoption. With less hype and more serious building, the bear market is the perfect time for companies to implement Web3 features that level up their customer relations, security and trust between stakeholders.

Keep things simple

Web2 companies should look for specialized blockchain solutions that can improve their business in tangible ways. Throughout this process, it’s important to focus on accessibility and avoid any unnecessary complexity for end users.

Web3 technology can be a valuable part of your tech stack without necessarily being visible to your customers or requiring blockchain experience. For example, the Starbucks Odyssey experience utilizes on-chain collectibles but allows users to purchase ‘stamps’ within the Starbucks web app with just a credit card and no previous crypto knowledge required.

To streamline the onboarding process for Web3-powered products, traditional businesses should also understand the concept of account abstraction. By customizing how individuals interact with the blockchain, account abstraction means that companies can offer an improved customer experience. One potential use case is paying transaction fees on behalf of users so they can quickly and seamlessly start performing actions on chain.

Run an efficient operation

Additionally, it’s important to keep your business’s internal processes straightforward and accessible when transitioning to Web3. It can be worthwhile to have your own in-house blockchain specialists, but you should also consider specialized Web3 contractors or white-label service providers to help reach your goals. This gives you more flexibility and can help your blockchain initiatives stay under budget and on schedule.

At the end of the day, business leaders should look for creative ways that Web3 can help delight their customers — while prioritizing simplicity and efficiency for all involved stakeholders.

Connect with your community

For every business, customer acquisition and retention are crucial. Companies routinely spend huge amounts of resources to onboard new clientele and make sure they stick around. In the blockchain era, there are many new ways to build personalized customer experiences, reward loyalty and create enduring bonds with clients.

Many customer retention strategies focus on making every individual customer feel special. With Web3’s power to distribute unique digital assets, it’s never been easier to ignite your community with a personal touch that makes users feel like they truly own a part of their favorite media franchise, car company or more.

As Web3 becomes more mature, it is no longer enough to take an existing Web2 business and tack on superficial blockchain elements. The real challenge is finding ways to deliver true value and engage customers in a sustainable manner.

One example is Starbucks Odyssey, which expands upon the famous coffee chain’s rewards program to offer new Web3-powered benefits such as online master classes and exclusive events. Starbucks Odyssey further promotes an already well-established brand identity with additional elements of gamification, personalization and exclusivity.

Improve your data security

In addition to owning a part of their favorite brand, blockchain also empowers users to take back ownership of their online data and digital identity. The new world of Web3 will mean that users can directly control their own information instead of being at the mercy of big tech.

New concepts such as self-sovereign identity (SSI) mean that customers could soon consent to only sharing their data as part of a mutually beneficial relationship that further strengthens brand loyalty.

Furthermore, this new data paradigm can lead to increased security through the decentralization of Web3. The centralized data silos of tech giants can have disastrous consequences, such as when 3 billion Yahoo accounts were compromised in 2013 alone.

Because Web3 uses distributed ledger technology to safely store data, Web2 companies can adopt these solutions to reduce their risk of leakage, theft and duplicate information. Instead of having a single point of failure like traditional data storage, Web3 storage requires consensus which can make it vastly more difficult to exploit.

Enhance trust and transparency

A key part of the Bitcoin and broader Web3 ethos is “verify, don’t trust.” This belief means that individuals should have more power to independently confirm what is true. So in addition to increasing customer engagement and making their data more secure, Web3 can also help businesses gain more trust. This is because blockchain technology allows companies to perform key operations with far more visibility in areas such as supply chain management.

While not every aspect of a business needs to necessarily be public on the blockchain, this can help mitigate issues from decreased consumer confidence — particularly in the financial sector.

For example, an enhanced level of transparency can help prevent bank runs such as what recently happened with Silicon Valley Bank. Web3 provides a new level of oversight in addition to regulatory watchdogs that can help ensure institutional balance sheets are in order and potentially even prevent the next wave of bank runs.

Your business is still early

Although blockchain has become a mainstream topic in the finance and business worlds for several years now, it’s definitely not too late to join this wave of innovation. Blockchain startups are only part of the equation in this digital revolution, as the ongoing transformation of traditional companies can also capitalize on this new wave of efficiency, performance and reduced costs. Whether the technology is visible to end users or not, today’s consumers want brands that are more engaging, secure and trustworthy. In each of these areas, Web3 is here to help.

Wolfgang Rückerl is the CEO of Istari Vision and Entity.global. His expertise is in Web3 startups, DeFi and GameFi. 

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

The 2020s have been a challenging decade so far, yet the transformative power of blockchain technology offers a better path forward.

Born from crisis

Around the globe, times are tough for many everyday people. Increases in cost of living minimized any growth in wages last year as inflation continues to take its toll. Additionally, world powers such as China and Russia are increasingly challenging the dominance of the USD as geopolitical tensions flare up.

In this precarious new world, decentralized cryptocurrencies can potentially be a source of stability and freedom. Bitcoin first emerged in the wake of the 2008 banking crisis and the impact of events like the Lehman Brothers collapse is evident in the writings of Bitcoin’s pseudonymous creator Satoshi Nakamoto.

While the subprime mortgage crisis was in full swing in February 2009, Nakamoto proposed an “e-currency based on cryptographic proof” that enables secure and effortless transactions without the need for a trusted third-party middleman. But has crypto lived up to its promise so far, and can DeFi help solve the ongoing instability of the 2020s?

A better system is possible

Cryptocurrencies like Bitcoin indeed help overcome issues with the current banking and monetary system in several different ways. For example, self-custody of DeFi assets protects individual investors against risks like institutional insolvency and bank runs. The collapse of Silicon Valley Bank in March 2023 shows that even large banks are still vulnerable to failure. But instead of requiring trust that their money is still there, Web3 users can verify their holdings directly on chain.

Additionally, blockchain technology allows for a more efficient and decentralized financial landscape. The peer-to-peer network pioneered by Bitcoin means that investors can hold their own assets and transact directly with no middlemen and significantly lower fees. And unlike with traditional banks, the rise of DeFi sectors like DEXs, lending and liquid staking means individuals can now have full control over exactly how their deposited assets are used.

Inflation is yet another ongoing problem that crypto and DeFi help solve. Unlike fiat currencies, cryptocurrencies like bitcoin have a fixed total supply. This means that your holdings in BTC cannot be easily diluted like if you hold a currency such as USD. While a return to the gold standard of years past is sometimes proposed as a potential solution to inflation, adopting crypto as legal tender would have a similar effect while also delivering a range of other benefits like enhanced efficiency.

CBDCs: A potential alternative?

As global superpowers battle for financial supremacy, everyday people around the world can benefit from decentralized and censorship-resistant assets like Bitcoin. Yet because cryptocurrencies pose a threat to the dominance of the current monetary system, many governments are taking measures to issue their own centralized digital currency.

Institutions such as the Federal Reserve and European Central Bank have been actively exploring the issuance of Central Bank Digital Currencies (CBDCs). In some ways, it is possible to equate the benefits of CBDCs with the utility of crypto. For example, a so-called digital dollar could help deliver faster and cheaper transactions while expanding access to the financial system.

However, CBDCs lack several of the key benefits of cryptocurrency. For one, they are still highly centralized like traditional fiat currencies. This means that true self-custody is not possible and your assets can be frozen by financial authorities at any time. CBDCs may also not help stem issues with inflation since they still allow central banks to print money through measures like quantitative easing. Overall, CBDCs only deliver a fraction of the benefits of decentralized cryptocurrencies.

Why not CEXs?

The Web3 community proposes a better alternative. With decentralized cryptocurrencies like Bitcoin, ordinary people can enjoy the benefits of digital money without facing the same problems that plague existing fiat currencies. Especially in times of crisis, DeFi is a great way to keep your money secure and under your direct control. Yet in order for DeFi to truly explode, the user experience needs to catch up with centralized finance.

Currently, the easiest way to buy and send crypto is with a centralized exchange (CEX). Like CBDCs, users of platforms like Coinbase and Binance must sacrifice some transparency and decentralization for a streamlined user experience. But events like the FTX collapse show centralized exchanges can become over-leveraged and insolvent just like traditional banks. Since many users are unaware of the advantages of DeFi and self custody, further education is key.

While writing down your seed phrase in a secure location is harder than quickly making an account on a CEX, the benefits are definitely worth it. When you have self custody, you can always track your assets directly on the blockchain and even move your funds to a hardware wallet for extra security. Plus, investors can make solid passive income on their investments at the same time with low-volatility DeFi strategies such as stablecoin farming.

DeFi could be the answer

In addition to continued instability within our financial system, the 2020s have also featured a heightened level of geopolitical turmoil. However, decentralized finance offers the chance to safeguard our financial freedom. We must stand up together to build a fair digital economy and a better fiscal world. While DeFi already offers a range of revolutionary opportunities for small investors, the community needs to keep pushing for more applications, improved education and a better user experience in order to achieve worldwide mass adoption.

Bitcoin helped pioneer this new era, but the future envisioned by Satoshi Nakamoto requires our continued efforts. Once the mainstream population can access DeFi as easily as walking into a traditional brick and mortar bank, the sky is the limit for Web3 adoption. In the meantime, it’s important to maintain a critical lens about the potential downsides of CEXs and government attempts to replace crypto with their own watered-down digital currencies.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Wolfgang Rückerl is the CEO of Istari Vision and Entity.global. His expertise is in Web3 startups, DeFi and GameFi. 

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

While crypto was invented to provide an alternative to the traditional banking system, converting to and from fiat currency is still necessary in many cases. And depending on local regulations, the policy of your bank, and even different cultural standards, your experience can vary greatly. So, what is the path forward to improve this situation around the globe?

Web3 adoption and regulatory backlash

The origins of Web3 are rooted in the pursuit of freedom. Bitcoin has historical ties to the cypherpunk philosophy, which represents a movement to empower individuals in a radical way: Wherever you are in the world, you can become your own bank to achieve sovereignty, anonymity and freedom.

In this way, blockchain technology can be seen as building blocks for a decentralized, borderless, permissionless, immutable and censorship-resistant future.

But whether to protect consumers from scams or to protect their vested interests in the current financial system, regulators worldwide have been cracking down on blockchain investing. As a result, many banks are making it difficult or even impossible for their customers to access crypto on/off ramp platforms.

Some countries like Egypt are afraid to lose track of digital assets in light of threats from organized crime and terrorism. So, these governments simply prohibit on-off ramp access.

But if Monero is the exception that proves the rule, the vast majority of crypto assets are more traceable than cash. And while both legitimate businesses and criminal enterprises continue to exploit tax havens and loopholes, sanctioning everyday Web3 investors appears to be a higher priority for many regulators compared to holding major tax evaders accountable. 

Varying attitudes toward crypto

Of course, each government around the world has a different relationship with crypto in their country. Regulation can change quickly, and some nations have moved toward facilitating a transparent Web3 economy while others take a more restrictive stance. For example, the United States has largely operated under the principle of regulation by enforcement from government bodies like the SEC instead of passing legislature with clear guidelines.

Furthermore, private banking policies also differ from country to country.

In Germany, for example,customers might find their bank accounts temporarily frozen for using on-ramp platforms. Moreover, since a large chunk of the population prefers bank transfers or even cash payments to credit cards, on-ramp platforms are facing the risk of seeming suspicious to many people — especially when asking users to wire their money to foreign IBANs to buy crypto. In France, people are accustomed to using their credit cards on a daily basis, yet most banks make you sign a disclaimer for crypto transactions.

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At the same time, there are also some countries like El Salvador where crypto is fully accepted as legal tender by both the state and private entities. Recently, the United Arab Emirates has also emerged as a crypto haven — especially among Web3 businesses such as CoinBase and Ripple which are relocating to Dubai in pursuit of regulatory clarity. Yet while Dubai is very crypto-friendly overall, they still have some rules in place, such as a ban on privacy-focused assets like Monero and Zcash.

In countries with unstable banking systems like Afghanistan, mobile money from exchanges like Binance has become a lifeline that allows individuals to control their personal finances despite sanctions and local restrictions. And in countries where crypto is banned entirely, there are entire illegal markets based on peer-to-peer (P2P) trading. In this situation, Web3 investors must face major risks of not only getting into trouble with the police, but also of being swindled by scammers.

Potential paths forward

There is no one-size-fits-all solution to overcome these hurdles. Here are a few solutions adapted to banked countries that the Web3 industry should prioritize:

• Providing national IBANs or bank accounts where people can wire fiat money to buy crypto, instead of routing through foreign countries.
• Negotiating with banks and credit card companies to avoid users getting blocked after processing a crypto payment.
• Including established payment options like PayPal or Klarna to access crypto payments.
• Educating institutions about the fact that the vast majority of Web3 assets are actually transparent and not suitable for criminal activities.

Recently, crypto-backed financial products like credit cards and ATMs have emerged as potential solutions. Yet, of course, these tools are still subject to regulatory scrutiny in each jurisdiction.

In unbanked countries, it’s a completely different story. Crypto wallets can be a very useful solution for individuals who cannot use a traditional bank account. In addition to being more accessible, blockchain banking can also be significantly faster and cheaper compared to existing payment solutions like Western Union. Unbanked countries should support Web3 payments in a transparent manner.

A historical responsibility

If financial institutions are threatened by the disintermediation of blockchains, they might not help facilitate a fair and decentralized digital economy anytime soon. Efforts from central banks around the globe to implement their own digital currencies, known as CBDCs, raise questions about whether governments want to coexist with existing digital currencies or replace them with their own.

But within the Web3 community, we must deal with reality and play every card we have. Of course, the blockchain world needs to continue to educate regulators and negotiate with institutions to help avoid any head-on conflict. We must also encourage virtuous behavior within our communities and denounce bad actors. DAOs and soulbound tokens (SBTs) could also help to prevent malicious behavior, including both scams and money laundering.

At the end of the day, adoption is the best way to overcome all of these challenges. As crypto becomes more ubiquitous worldwide, both public and private institutions will have no choice but to facilitate access or fall by the wayside. Once the majority of people use crypto to buy or sell goods and services, the on/off-ramp problem will disappear and a new era of finance will officially begin.

Wolfgang Rückerl is the CEO of Istari Vision and Entity.global. His expertise is in Web3 startups, DeFi and GameFi. 

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

Learn more about Cointelegraph Innovation Circle and see if you qualify to join

Achieving mainstream Web3 adoption is a key goal for the blockchain community. We believe strongly in the revolutionary power of this technology, but how do we share its potential with the world? There is no one-size-fits-all solution, so blockchain advocates need to tailor their sales pitch to different audiences in order to kickstart mass adoption from the ground up.

In a little over a decade, cryptocurrency has risen from an obscure corner of the dark web to a significant focus of many investors and institutions around the globe. Compared to traditional financial systems, however, Web3 still remains an afterthought.

On one hand, the lack of clear crypto regulations in countries such as the U.S. remains a major hurdle. The legal gray area around Web3 currently limits the amount of overall investment activity. While constituents in the U.S. can call their representatives and urge them to pass common-sense laws around cryptocurrency, what else can people around the world do to push the blockchain world forward?

A holistic approach to growth

There are actually many areas where Web3 supporters can make a difference. In particular, private individuals and businesses can join forces to raise awareness of what blockchain is really about. Education, development and onboarding are all very powerful tools that can bring us all one step closer to a more vibrant and decentralized world.

To increase awareness, we need different strategies for reaching different target groups. Growing this emerging digital industry isn’t just about finding more users, but also onboarding more companies and more professionals who can build useful applications. If builders of all kinds start working together more, the sky is the limit for Web3.

Attracting developers: Offer fair rewards

Coders play a huge role in the path to blockchain mass adoption. Talented programmers lead to more quality dApps that help bring Web3 to life. However, the search for reliable Web3 developers is very competitive. While blockchain startups might not be able to pay the same salary from day one as Web2 tech giants, they can get creative in other ways, such as offering token allocations and performance incentives.

Grants and hackathons are also important. These events can present a perfect opportunity for promising young coders to show off their talents and secure some funding. Make sure to provide meaningful prizes so that if a hackathon participant delivers a promising minimum-viable-product, they can tap into the resources necessary to continue working on their idea. Overall, a modest investment in community builders can pay dividends down the road for the growth of Web3.

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Empowering businesses: Help them think differently

While it may be fun to create branded NFTs as collector’s items, this is only one of many ways that blockchain technology can drive value for companies. NFTs, DeFi and GameFi are just scratching the surface of the vast potential of Web3, and there is still a huge opportunity for companies of all sizes to get in early on the blockchain revolution. For example, any businesses that process credit card payments can potentially downsize their overhead costs by integrating Web3 solutions.

Industries like real estate, logistics and medicine could also be the next use cases for decentralized technology. Consumer brands can even use crypto rewards as the foundation for next-generation customer loyalty systems. But whether you are a local entrepreneur or a multinational corporation, it’s not as easy as it looks to successfully transition to Web3.

Crypto veterans need to help support and educate new businesses with the experience and know-how needed to succeed in this exciting decentralized world. To keep overhead costs down, Web2 businesses should explore streamlined and audited solutions from third-party contractors rather than developing their own blockchain products entirely from scratch.

Onboarding users: Focus on user experience and security

The public also needs education and user-friendly solutions in order to widely adopt blockchain technology. That can mean leveraging the power of the blockchain while making it appear invisible to end-users. Furthermore, Web3 supporters need to work together to flip the script on inaccurate narratives about crypto and demonstrate its potential and security. Every day people are motivated by economic value, but they can be hesitant to try new products unless they have peace of mind and a smooth user experience.

One way to achieve that goal is by making the technology seamless to end users. Delivering an intuitive UX is a balancing act where developers can potentially provide the option to create their own non-custodial wallet if desired. While safely storing 12 or 24 words might not seem that difficult, it can be a barrier to onboarding non-crypto natives who are used to setting a simple password they can quickly reset at any time. A hybrid approach can help new users get started with a new dApp without having to write down a long seed phrase, while also giving them the opportunity to adapt later once they learn more about why self-custody is valuable.

In terms of security, there are several ways to dispel the misconception that cryptocurrency isn’t safe. Two-factor authentication can help stop hackers in their tracks even if they manage to somehow access your wallet. Hardware solutions are also a useful way to minimize risk from bad actors. Education about the risks of Web3 is also crucial since scammers are always willing to exploit the knowledge gaps of new users.

Web3 grows when we work together

With the right funding, expertise and user experience, the blockchain revolution can uplift people from around the world in many different ways. This current moment is pivotal, as the bear market is a great time to build the foundation for onboarding the next billion users to crypto. Web3 believers must work together to provide key resources and overcome resistance from governments, banks and big corporations. By conquering these hurdles, we can help kickstart mass adoption while still maintaining the original decentralized spirit of Web3.

Wolfgang Rückerl is the CEO of Istari Vision and Entity.global. His expertise is in Web3 startups, DeFi and GameFi.

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

Learn more about Cointelegraph Innovation Circle and see if you qualify to join

The DeFi revolution is transforming our financial landscape and empowering everyday people to take back control over their assets. However, the skill level necessary to practice DeFi successfully remains an obstacle to mass adoption. To overcome this roadblock and help grow decentralized finance, we need more DeFi aggregation services.

What is DeFi aggregation?

DeFi made simple

Aggregators are platforms that combine several different DeFi protocols to create a more efficient and complete service for end users. For example, 1inch aggregates multiple DEXs to find the best routes with minimal gas and slippage costs. Yearn Earn, on the other hand, aggregates several different loan, insurance and yield protocols. Other aggregators like Open Ocean help users capitalize on a range of opportunities via both DeFi and CeFi.

In each example, aggregation improves the user experience by increasing efficiency and reducing complexity. Instead of needing to jump between a variety of different protocols, DeFi investors can simply select what they want to accomplish and let the aggregator do the rest.

Amplifying communities

A key strength of Web3 is the community. The number of active users is what makes a protocol successful by generating trading volume and locked value (TVL). Users are critical to growth since they can promote your project with genuine enthusiasm. Yet for DeFi to continue growing, it needs to reduce fragmentation between users on different protocols and blockchains.

By uniting different communities around aggregation platforms, DeFi ecosystems gain more visibility, strength and choice without taking away from the underlying protocols. Aggregation can even make it easier to connect multiple networks. Bridge aggregators are an increasingly useful tool for cross-chain Web3 users since they can automatically determine the most efficient and secure routes between different blockchains.

On-chain “LEGO blocks”

The image of LEGO blocks helps illustrate why aggregation is important. Each DeFi protocol or dApp represents a block that can work together to form a vibrant, evolving structure. For individual users, the challenge is to leverage these different pieces together to create a powerful strategy that fits your needs.

Without aggregation to help simplify operations, this can be like building a LEGO model with no instructions. But with DeFi aggregators, even non-professional investors can take advantage of the different opportunities that are available across the Web3 ecosystem. Aggregation isn’t just useful for DeFi, as tools such as NFT marketplace aggregators can also make other aspects of Web3 more user-friendly and efficient.

Helping onboard users to Web3

A smooth UX doesn’t need to be centralized

While the general public might not know exactly how it works, the interest rates on our bank accounts are not magic money. Banks invest and make our money work to generate returns through various financial services. The general public does not necessarily want to become a financial expert, as long as they can protect and grow their assets over time.

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Aggregators make the user experience of DeFi smoother and more comparable to the streamlined nature of traditional finance (TradFi), as well as CeFi platforms. Yet unlike TradFi and CeFi, DeFi users retain full custody of their funds.

More yields, fewer tradeoffs

Removing middlemen like banks, brokers and more through DeFi smart contracts is a revolutionary opportunity for non-professional investors to make their money go further. But one of the reasons TradFi institutions can get away with offering low returns is because they make the investing process simple for end users.

However, the rise of aggregation services means that investors may no longer need to choose between higher yields and a straightforward user experience. While aggregators may take a small portion of fees generated through their services, these fees are typically much less than the overhead of centralized solutions.

Leveling the playing field

Mass adoption requires participation from investors at the retail, corporate or institutional level. While the higher levels of finance are dominated by industry professionals, retail investors lack the knowledge to manage a large range of different DeFi protocols themselves. This is where aggregation comes into play: by simplifying usage and enabling access to returns with the least amount of clicks and knowledge possible. Now, anyone can participate in this new financial world.

Making DeFi more secure

Decentralization is key

Times are tough for everyday people who want a safe haven for their hard-earned savings. Banks have traditionally provided this peace of mind, yet recent bank scandals continue to erode this trust. Enjoying full custody over your assets through DeFi is revolutionary, but many people don’t want to sacrifice user experience or security.

However, trustworthy aggregation services can solve both problems. If aggregators provide a streamlined UX and only include audited and secure protocols, it makes it easier for users to switch over from traditional finance to Web3.

Overcoming DeFi challenges

Current pain points with regard to DeFi security include the risk of impermanent loss, hacking, and too much slippage. These are crucial topics that still need research, development and innovative solutions to overcome. Aggregation tools are promising in this area since they can prioritize the most efficient pathways as well as the most secure routes.

Insurance and risk management

When it comes to managing risk, decentralized insurance protocols can play a major role in addressing investors’ concerns and helping kickstart adoption. Insurance aggregators make it simple to manage risk while still enjoying the fruits of the blockchain world. Although DeFi insurance requires investors to give up a small portion of their returns, the overall performance of decentralized finance still remains significantly more attractive than what conventional banks offer. Additionally, this extra layer of security can help onboard more users to Web3.

Aggregating a brighter future

Overall, DeFi offers a new chance for investors to gain independence and earn greater yields by making their own DeFi ‘bank account’ that is self-hosted, secure and protected from banking failures. While mastering a range of DeFi protocols is a big challenge for most everyday people, the aggregation of multiple high-quality platforms can make DeFi more accessible, more efficient and more ready for mainstream adoption.

Wolfgang Rückerl is the CEO of Istari Vision and Entity.global. His expertise is in Web3 startups, DeFi and GameFi. 

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

Learn more about Cointelegraph Innovation Circle and see if you qualify to join

GameFi is a very promising use case for Web3 and the metaverse, but blockchain gaming builders shouldn’t forget the core elements that made video games popular in the first place.

Harness the power of Web3

With billions of gamers active around the globe, the total addressable market for blockchain gaming projects is massive. The value proposition for GameFi is clear: instead of paying top dollar for video games and bonus downloadable content, why not have fun and earn something back for your time?

Web3 technology has so much potential for players to own a stake in their favorite games and take full control of their digital loot. Beyond the obvious use cases of using tokens for rewards and NFTs for in-game assets, there are a huge amount of potential applications for blockchain gaming that have not yet been fully explored.

Not always the best of both worlds

Although the Play To Earn (P2E) genre has received some hype in recent years, this category of video games remains far less popular than Web2 gaming around the world.

For many prominent P2E games like Axie Infinity, the community’s focus seems to be more on earning tokens than the actual gameplay experience itself. While rewards alone might be enough to get some gamers onboard, GameFi builders must break through the crypto bubble to achieve truly widespread adoption throughout the mainstream gaming community.

The recipe for GameFi success

In order to gain traction with crypto-skeptical players, blockchain games need to provide gameplay that is compelling in its own right. Recently, a trend known as Play and Earn (PAE) has emerged that attempts to balance Web3 aspects with the excitement of traditional gaming.

No matter how you categorize your project, it’s crucial to strike the right balance between gaming and Web3.

#1: Focus on high quality gameplay

To reach adoption with more gamers worldwide, GameFi builders need to ensure their game is actually fun to play. Just because your game has a token and NFTs to collect, the core gameplay should still be exciting. There are many ways to achieve this, such as unique game mechanics, impressive graphics or addictive multiplayer experiences. But in general, it’s always a good idea to incentivize skill and strategy rather than just rewarding whichever users own the most valuable NFTs or spend the most time playing.

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GameFi projects should make sure their game is interesting even for hardcore gamers who don’t care about its blockchain aspects. Blockchain gaming is great for building communities, so create exciting multiplayer modes that bring people together and increase your exposure on platforms like Twitch. This sector is a great place for innovation, so don’t be afraid to experiment with new technology such as AI, VR and cloud gaming. 

#2: Make onboarding easy

Since too many barriers to entry can turn off some gamers, seamless onboarding is crucial for GameFi adoption. It’s important not to scare away new users from outside the blockchain community with too many initial requirements.

One way that projects can strike this balance is to offer a custodial wallet for new users with the option to switch to their own non-custodial wallet later on. This provides the best of both worlds, since new gamers can easily get started while more proficient Web3 users can take full control of their decentralized assets.

If it’s simple for new players to get started, GameFi will be able to better attract users from the vast worldwide gaming community. Even if players don’t realize their actions are connected to the blockchain, this can create significant new on-chain activity in terms of new addresses and transactions.

#3: Build on chain

When it comes to blockchain gaming integrations, the sky is the limit. And since this is Web3, a truly groundbreaking GameFi game should build key features directly on chain. GameFi projects should leverage the power of tokens, NFTs, SFTs, smart contracts and more in innovative ways to make their games stand out and keep players coming back.

Some blockchains allow for NFT creators to embed unique statistics directly on chain for each NFT. These metadata attributes open the door to many possibilities for world building and cross-platform compatibility, since they can easily be used across multiple games or applications.

Without any innovative Web3 integrations, your project can seem like just another Web2 game with Web3 features tacked on as an afterthought. So don’t be afraid to push the boundaries of what’s possible in GameFi, while keeping in mind that each element should contribute to the overall user experience.

#4: Plan for scalability

Behind any Web3 game, building on a powerful blockchain can make a big difference regarding the accessibility of the decentralized features. With high transaction fees, players must spend more of their hard-earned profits just to interact with the blockchain. Slow transaction times and frequent outages can also be a major pain point for gamers and metaverse users.

Blockchains that are fast and have low gas fees enable gamers to easily own characters, items and more directly on-chain. This way, users can take back control of their digital property to trade, collect and even use their assets in other games or applications. It’s best to plant roots for growth from day one, since it might be too late to make your game scalable after it has already gained traction.

It’s time to innovate

Just because Web3 can add another dimension to video games, it doesn’t mean they need to be one dimensional. The way to supercharge GameFi is to innovate in Web3 while preserving key elements of Web2 gaming like fun gameplay, remarkable graphics and a smooth user experience.

If blockchain games can effectively bridge the gap between the crypto and gaming communities, they can be a valuable gateway for onboarding new users toward other Web3 use cases such as DeFi and beyond.

Wolfgang Rückerl is the CEO of Istari Vision and Entity.global. His expertise is in Web3 startups, DeFi and GameFi. 

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

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Whenever you put your assets to work on the blockchain, it’s crucial to balance risk and reward. Although liquidity pools offer a potentially generational opportunity, users must take a realistic look at the DeFi ecosystem and come up with concrete plans to limit their downside.

Liquidity pools: The cornerstone of DeFi

For decentralized finance (DeFi) to function in a fast and efficient manner, DeFi protocols require liquidity. But how does the liquidity pool process work exactly?

There are several types of protocols for providing liquidity:

• For decentralized exchanges, users provide pairs of crypto assets that allow other users to trade that pair while paying a small fee.
• For lending platforms, users make their liquidity available and earn interest from borrowers who deposit some of their assets as collateral.
• For DeFi insurance, users allocate liquidity to insure the risks of others’ investments. In return, they earn regular fees and possibly some additional rewards.

Let’s now take a closer look at an example where a user provides a pair of tokens as liquidity on Uniswap V3. In return for supplying a pair such as USDC/ETH, the liquidity provider receives an LP token that represents their share in the pool.

Traders who use the DEX to swap tokens pay a fee of 0.05%, 0.30%, or 1%. In addition to selecting a fee tier, liquidity providers on Uniswap V3 can even allocate their liquidity to a specific trading range to capture an even greater amount of fees. Known as concentrated liquidity, this mechanism gives liquidity providers the chance to earn even greater returns — especially if they dedicate a lot of time to conducting research and actively managing their positions. 

This is a great example of how DeFi can potentially bring higher returns than traditional investments by leveraging the power of blockchain technology. But while DeFi users directly control their fate, they must also assume the risks and make wise decisions when performing actions like providing liquidity.

Understanding the risks of liquidity pools

Since the crypto market can be quite volatile, it’s important to follow the market cycles. Anticipating a bullish market, investors can make significant profits from carefully selected non-stable assets. On the other hand, it could be advantageous to allocate more capital to stablecoins when token prices appear to be at their peak.

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Stablecoins can be tied to the value of less volatile assets and allow users to earn some returns while limiting their risk. On a stable-swap DEX, investors can provide liquidity on pairs of multiple stablecoins to earn yields with minimal impermanent loss.

Impermanent loss is one of the most notorious risk factors in the DeFi space. When providing a pair of tokens as liquidity, the value of the crypto assets can move in opposite directions — sometimes violently. Once the user wants to break up their pair to recover their initial investment, it is possible that the value of the sum of the two tokens is lower than if they had staked them or even just held the tokens separately.

This is called impermanent loss because the change is only realized when the investor withdraws their liquidity. With this in mind, users should always be careful and compare their potential losses to the returns offered on the pool.

Overcoming the challenges

First of all, tokenomics are always fundamental. Is the supply limited, deflationary or inflationary? Are there burn mechanisms? What is the share of venture capitalists who are invested? What is the team’s level of expertise and commitment, and what is their token vesting schedule? What is the token utility, and do people use it, keep it or dump it? Continue this investigation on GitHub and make sure to read the project’s audit reports.

The first step before investing in DeFi is to research the protocols and understand them. If you have a large amount of capital, it is hugely beneficial to first invest your time in learning from others who have more experience.

Furthermore, diversifying your assets, stablecoins and protocols is important risk protection, and subscribing to DeFi insurance can also be a smart decision. Insurance protocols can protect you against risks like a stablecoin depeg, insolvency event, liquidity pair imbalance or the hack of a smart contract. While you should be aware of the scope of your coverage, insurance is often the only way to recover your funds in case of an accident. Allocating capital to different platforms, blockchains and ecosystems also allows you to protect yourself against hacks, exploits or protocol bankruptcies.

Diversifying your strategies is also crucial. Consider avoiding going all in on entering liquidity pools, and consider allocating some funds to relatively more conservative strategies like staking. While the rewards might be smaller, staking can mitigate risks while also helping protect the underlying security of proof-of-stake blockchains. Although you might miss out on some passive income, it also helps to keep some of your capital in cold storage to guarantee that you always have a reserve fund on standby.

Knowledge is power

Making the most of liquidity pools requires rigorous research and careful planning. With a well-executed strategy, it’s possible to generate generous returns. But while making gains is always the goal, investors should also be realistic about potential risks. Useful ways to protect your downside are taking the time to discover the best opportunities, surrounding yourself with well-informed people and diversifying your DeFi investments. While all of these processes take time, your growing knowledge base will pay dividends in the long run.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Wolfgang Rückerl is the CEO of Istari Vision and Entity.global. His expertise is in Web3 startups, DeFi and GameFi. 

This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.

Learn more about Cointelegraph Innovation Circle and see if you qualify to join