The rise of Web3 has enabled innovation and change that extends far beyond cryptocurrency and NFT trading. With the potential to become a major force for social impact, Web3 technology is enabling blockchain-based projects to solve real-world problems and make a difference.
Innovative Web3 verticals have arisen to help tackle some of the pressing issues that communities and society as a whole face today.
GameFi has become one of the fastest-growing sectors in the Web3 industry, accounting for about half of all blockchain usage based on January 2023 data from DappRadar. Combining gaming and finance to create new ways to generate income through Play-and-Earn (P&E) games, the GameFi movement has become most popular in Southeast Asia, where financially disadvantaged communities play NFT games as a means of earning supplemental income. Over 23% of the populations of Vietnam and the Philippines have reportedly engaged in P&E games, a region where the median monthly minimum wage is only US$300.
Taking a step to create social impact even further, entertainment company Digital Entertainment Asset (DEA) which operates the popular PlayMining GameFi platform, also channels back their platform profits for social good. They engage in various charitable initiatives like an ongoing agricultural project in the Philippines and a recent food drive in Indonesia organized in collaboration with YGG SEA, the Southeast Asian chapter of Yield Guild Games.
Japan’s national newspaper, Nikkei recently published an article focused on the potential impact of AI and Metaverse gaming on society. Kozo Yamada, co-CEO of DEA said that gameplay could “contribute to solving social issues” and explained how anybody regardless of financial means could easily borrow the NFTs to get started with P&E gaming and share the earned income with the owners. According to PlayMining, through their ‘scholarship system’, more than 9,300 NFT borrowers have earned over US$4.7 million from their top game JobTribes since December 2021, with some saying that it supports their daily living expenses.
DeSci: Decentralizing Science for Social Good
The Web3 space is also seeing a rise in DeSci (Decentralized Science) projects, where blockchain-based solutions are being used to solve some of the problems plaguing modern science such as funding, publishing, and copyright. The academic research industry has been stymied by a funding model that primarily supports widely publishable research with limited-duration grants. This “publish or perish” pressure results in most research being focused on short-term projects that feed media hype rather than less interesting work that is more critical for society.
Blockchain-based funding models and IP-NFTs give DeSci the opportunity to turn this paradigm on its head by promoting fairer representation and enabling scientific communities to be self-sustaining. One of the major movers in the DeSci fundraising space is Gitcoin, a platform that has enabled developers to gain nearly US$73 million in funding for open-source projects since 2017. Gitcoin utilizes quadratic funding, a system that uses a pool of assets to match community donations in a mathematically sound and democratic fashion. Kevin Owocki, a Gitcoin founder, explained that quadratic funding is “a way of pushing grants programs from a central grant administrator… to your peers in the ecosystem,” essentially equalizing each grant with the level of respect it has in the community.
Once funded, scientific research can be directly tokenized as IP-NFTs, allowing the NFT owners to receive remuneration for licensing of intellectual property.
Ethical DeFi and ReFi: “We are the [Web3] World”
Decentralized Finance (DeFi) has become one of the most widespread uses of Web3 technology, with projects innovating to create new P2P financial products and services. Many DeFi projects target disadvantaged communities in an attempt to help these people access financial services through their mobile phones that they can actually use in their daily lives.
However, DeFi has also faced criticism for the many pumps, dumps, scams, and rug pulls in the space. Ethical DeFi was birthed to address these concerns – by marrying Islamic Finance principles, which prohibit unethical and exploitative business practices to core tenets of blockchain such as transparency and immutability.
Pioneering ethical DeFi platform MRHB.Network launched in December 2021, open to both halal and ethical communities. Their offerings currently include a crypto wallet that screens out unethical coins and protocols, an anti-NSFW NFT marketplace, and a decentralized commodities exchange where users can fractionally acquire tokenized gold and silver (Gold and Silver Standard tokens) redeemable from Australia’s leading bullion dealer, Ainslie. MRHB is also making use of quadratic funding in its Decentralized Philanthropy (DePhi) platform scheduled to launch this year.
A much newer movement running in parallel with the DeFi space is Regenerative Finance (ReFi), which is focused on creating blockchain-based value estimations of natural assets such as forests and oceans, based on their use as carbon sinks. This provides financial resources to corporations and individuals looking to lower their carbon footprint by regenerating natural environments. Notably, Gitcoin is also a major player in this industry – in September 2022 alone, it helped nearly 1,500 public goods projects raise almost US$4.4 million in funding in just 15 days.
While 2022 saw a number of failures that crashed the markets leading to a more prolonged crypto winter, it was also the year social impact movements and projects started to be taken seriously as a force that can make a real communal difference in the world, which will hopefully continue to grow.