Web3 IP: What’s Next?

Future of Web3 IP

Authors: Leo Spruth & Thomas Issa, Outlier Ventures; Translation: Blockingxiaozou

Under the combined effects of unfavorable macro conditions and a lack of innovative catalysts, the NFT industry has rapidly matured. For the past two years, the industry’s focus has been on highly speculative projects driven by avatar IP, characterized by a strong emphasis on the founder and effectively fostering community engagement, and gaining significant returns from the initial mint. However, as the market becomes saturated and macro conditions continue to suppress value extraction from mints, this trend is weakening. Regardless of the current market sentiment, we are witnessing a surge in infrastructure and use cases for Web3-IP empowerment of creators and brands, such as Jack Butcher’s application of NFT metadata and CC0 (Creative Commons) principles, manifold.xyz’s tooling for empowering creators, Nike’s .Swoosh platform bringing NFTs to fans, and the controversial but necessary financialization of NFTs.

The question now is, what’s next? At Outlier Ventures, we see the Web3 IP industry expanding and becoming increasingly complex, particularly with a focus on the development of multi-layered IP ecosystems. This trend is driven by market segmentation, the expansion of successful Web3-native projects, and the entry of well-known Web2 companies, and it will change the future of sales economic structures, particularly putting pressure on the supply-demand principle. In most Web3-native sales structures, NFTs are distributed with a fixed supply (typically around 10k), a fixed price, and very strict parameters and additional supply use cases (typically in the form of secondary markets). On the other hand, multi-structure IP platforms have chosen more flexible supply-demand structures.

1. Experimental activation

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Through phased experimental activation activities, various projects have laid the foundation for Web3-native consumer IP and multi-layered platforms. Dookey Dash made headlines with one of the largest esports prizes ever, Pudgy Penguins expanded into the toy market, DeGods expanded their ecosystem through y00ts, and Doodles 2 released expansion packs and sdudio applications. If we take a closer look at each of the top Web3-native NFT projects, we’ll find that they’re all working hard to expand and diversify their IP ranges.

So what do multi-layered IP platforms look like? NBA Top Shot’s core product elements provide a good example of these key features:

Clean UX/UI (most of the time)

Focus on community

Refactoring NFTs

Interesting minting mechanism

Fair pricing

Positive challenges

Set and collector incentives

Rarity structure

+EV (for now)

2 , Beyond Speculation

In hindsight, it is often easy to see the visible factors that led to the success of the Top Shot platform, but do not forget that many well-funded companies have made countless failed attempts to create products that fit the market, which shows that creating brands and developing value beyond speculation is a challenging task. As far as IP and NFTs are concerned, their non-long-term nature makes it a challenge to translate their value and utility into tangible results, requiring careful attention to detail. Several factors will play a role in this process:

Web3 native IP not only includes products, but also communities, especially strong IP games that rely on cultural consumption. In this case, the brand and community are interrelated, and the brand needs to consider a large and powerful group of stakeholders, which is a relatively new concept. In addition, financial incentives often become the main focus, shifting the team’s attention away from product development and leading to high expectations from holders, and even though the founders have grand visions, concrete execution often shows a lack of clear long-term goals and company structure. In addition, technical limitations of interactive IP or lack of infrastructure often lead to isolated projects that fail to gain traction.

3 , Web2 giants embrace Web3 opportunities

Despite facing many challenges, Web2 giants, such as Adidas, Reddit, Nike, and Starbucks, are actively embracing the opportunities brought by Web3. Utilizing their rich and powerful experience, resources, and brand assets, they are working hard to carve out a space in the Web3 field. These brands have not followed the stagnant industry norm of a single IP release, but have chosen to build immersive multi-layer ecosystems. These brands have a deep understanding of how programmatic assets (especially NFTs) can redefine and strengthen their IP through gamification, immersive experiences, and automation, and establish connections with consumers. More specifically, they seem to recognize the importance of community, ownership, and co-creation principles, and must use these principles to attract today’s digital consumers. By identifying a “blue ocean” for their traditional IP and adopting the smooth front-end and seamless blockchain blur of the Web2.5 concept, they have achieved market penetration by creating platforms to acquire, develop, and distribute IP in multiple ways, gaining a first-mover advantage.

4. Collaboration or Competition?

So, what’s next? Will the Web3 native IP ecosystem compete with existing large enterprises, or will the relationship between them create synergies and bring healthy market diversification? Currently, Web2 and Web3 native IP patterns are evolving in different directions, and Web3 native IP brings clear category-defined projects and innovations, establishing industry standards for handling IP, such as Sappy Seal’s Meme Machine, the Nouns Prop House public infrastructure, or decentralized narratives on shibuy .xyz. Generally, Web3 native projects have a strong community and a clear vision, which enables them to surpass the traditional single, massive asset aggregation structure. Although avatars and PFPs are still an important aspect, IP development must start from releasing a single PFP or avatar series, attract individuals with the concept of digital identity, an idea that is being surpassed.

We see that the trend of single-structure IPs is receding as projects specialize and expand IP into specific verticals—from game ecosystems like Treasure DAO, which constantly expands its game catalog, to collections like Moonbirds, which extends its borders with the all-new Mythics IP, or cultural products like FWB, which collaborates with world-leading brands’ DAOs. The same principle can also be seen in Web2 companies like Nike, which has demonstrated a multi-layer platform using .Swoosh. A good example is their OF-1 activation, in which they leveraged their famous AirForce One sneakers IP and used Web3 technology to involve users in the co-creation process.

5. Closer Feedback Loops, Faster Iterations

This approach allows brands and projects to simplify their IP development process, collect early feedback, and focus on specific verticals that matter to their customers. With closer feedback loops, product iterations become faster and more effective, improving narratives, community incentives, and generating stronger psychological ownership among holders. Thus, it positively shapes community sentiment.

We aim to further strengthen these advantages through on-chain creativity, composable and NFT-centric infrastructure systems, which will allow participants (and creators) to directly complete the peer-to-peer creation, presentation, distribution, management, and discovery process on top of infrastructures like Zora or MetaLabel.

As projects, both traditional and native, transition to multi-layered IP, we cannot help but be excited about the future, and we realize that these unique cultural distribution platforms play a critical role in our ecosystem. Although the methods used may differ, their ultimate goal is the same: to elevate the fusion of culture, finance, and technology to new heights and establish innovative ways of creating, consuming, and distributing culture. Web2 projects strive to consolidate existing IP positions by reforming methods, while Web3 native projects adopt inherent experimental thinking, and each unique method has made a significant contribution to the most important cultural distribution platforms of our generation.

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