eb3 and blockchain had their most tumultuous year yet. Corruption, crypto crashes, and cyber hacks marked this space – and the headlines. But if you look past the deceit and rug pulls, one thing becomes clear: the technology can stand up to even the most complex manipulations. In fact, the value of Web3 and the tech underpinning it, blockchain, has increased due to innovation and adoption.
Gartner, the technological research and consulting firm, cautions, "It's easy to throw the baby out with the bath water, so it's important for market observers to untangle the facts and recognize the value of blockchain innovations."1
They continue, "It takes time for the 'good use cases' to catch up and it takes even more time for fraud and security controls to be deployed."
Why Impact Investors are Flocking To Web3 Social Impact Projects
Businesses have begun integrating blockchain applications such as NFTs, smart contracts, and tokens in their daily operations. The 'Web3 blockchain’ market is predicted to reach $33.53 billion by 2030, growing at a CAGR of 44.9%.2 VCs have already invested $90+ billion in Web3, $23 billion in 2022 alone.3
Blockchain has significant use cases for solving social and environmental challenges, providing financial inclusion, helping marginalized and vulnerable communities, and protecting human rights. This feature has created a strong intersection between Web3 and impact investing.
Concurrently, the global impact investing market is also growing — in 2022, it crossed $1 trillion for the first time.4 This growth aligns investor goals with social impact and technology, making investing in impact tech a viable option.
5 Questions to Ask Before Investing in Web3 Social Impact Projects
Any blockchain or Web3 project’s potential come down to the same metrics, such as its product development, community, marketing, and tokenomics. But to get a better understanding, investors should ask the following questions:
- How fundamental is blockchain to the social impact project?
Consider what this particular technology adds to the project. For instance, the Carbon Token Project tokenizes trees at an individual level, thus making individuals responsible for protecting, growing and taking care of them. Not an easy task without the transparency and traceability of blockchain.
- Is the idea behind the Web3 social impact project decentralized?
Any blockchain-based project should, by definition, be decentralized, meaning all members have control and decision-making power. This also means one or two bad actors cannot derail the project. The Plastic Bank empowers and tracks over 612 recycling communities in the Philippines, and every individual receives a digital reward when they trade in plastic or recyclable materials.
- Does the project benefit individuals and communities?
Blockchain can be very helpful in bringing back visibility, ensuring the right communities benefit, and increasing trust within the space. When the Ukrainian Government published its crypto wallet address in the wake of the Russian invasion, people worldwide donated $100+ million within days. Web3 social projects also need to be utilitarian.
- Is the Web3 project sustainable over a long time?
A dominant feature of Web3 projects is 'to-earn,' such as play-to-earn or impact-to-earn — whether that's micropayment or big payouts. Without proper incentives, the distributed community will have little motivation to keep going. Web3-based game Leyline, for instance, gamifies altruism by giving players proof-of-good points that allow them to unlock special powers and rewards in the virtual world.
- What is the true potential of the Web3 social impact project?
Projects that try to tackle the UN SDGs, such as overcoming poverty, inequality, climate change, environmental degradation, peace and justice, are a good starting point. Web3 and DeFi have incredible potential to build financial inclusion and empower individuals to take action, regardless of any central authority or geographical borders. The Agriledger blockchain helps farmers in Haiti sell their produce directly to markets in the US with no intermediaries, giving them much more control and leveling the playing field.
How Rabble is Drawing Out The True Potential of Impact-to-Earn Web3 Projects
Web3 can supercharge social impact projects by providing transparency, trackability and decentralization. These projects grow by recruiting members from around the globe, working in a peer-to-peer setting, and being held accountable for their actions.
Rabble incorporates all these features while enabling individuals to take actions that can lead to impactful change. We are a decentralized autonomous organization aligning young people, activists, nonprofits, brands, and investors who want to take on the two most critical problems of today, climate and social justice.
Gen Z and Millennials are more concerned about the future of the planet, and they want to do more than click at posts. Rabble is the tool that enables them to make an actual, real-life difference and rewards them for their work. Our Ethereum-based platform tracks their work/actions, and they receive rewards supported by the brands and investors who work with us.
Incentivizing good action is incredibly important to ensure individuals take ownership and keep showing up. And these small actions add up to create steadfast change. If you're an impact investor, wondering how to enter the Web3 space, or want to become a better corporate leader, drop us a line.