📝#78: Web3 Loyalty's Comeback

Marc Baumann

Jun 14, 2024

Hey, it’s Marc. ✌️ This weeks field notes, your 100% signal in Web3:

Apple unveils Apple Intelligence (AI)
Hugo Boss embraces Web3 loyalty
Bvlgari debuts onchain products
Solana Labs’s new customer loyalty platform
McLaren’s Formula 1 NFT launch
Paxos introduces stablecoin
Paradigm’s third $850M venture fund
Polygon’s $720M grants program

Let’s dive in. 🦈 | Read time: 4min

📚 Top 5 Reads

'Apple Intelligence is now 'AI'. By Michael Parekh. Link
What is generative AI. By McKinsey & Company. Link
Xsolla State of Play in Mobile Gaming 2024. Link
How Hugo Boss steps into Web3 loyalty. By Marc Baumann. Link
The Evolution of Memes and Their Place on Blockchains. By Zack Pokorny. Link

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✨ Web3 & Consumer

Bvlgari goes onchain⛓️

This week, Bvlgari has introduced Digital Product Passports (DDPs) on the Aura Blockchain.
Bvlgari launched its first highly limited, $440k-priced watch connected to an NFT in March 2022.

Zooming out: Many luxury brands have already launched DDPs to bolster direct-to-consumer connections and offer added value. This includes:

Guaranteeing traceability and authenticity
Access to information on a product’s lifecycle for consumers.

Diving deeper: A Digital Product Passport (DPP) is a digital certificate of authenticity and ownership that helps to monitor and control the life cycle of the product promoting a circular economy.

The Aura Blockchain Consortium, led by luxury giants like LVMH and Cartier, is deploying blockchain-based Digital Product Passports globally, tracking over 30 million products with 40+ luxury brand members

Understanding the market: Key start-ups building on alternative solutions for DPPs are EON, KORE Technologies, and Arianee.

By the numbers:

The global luxury market was valued at $387B in 2023 and is anticipated to grow at an annual rate of 3.22% (CAGR 2024-2028).
By 2030, it's anticipated that blockchain-driven digital assets will constitute 10% of the total luxury goods industry, presenting a revenue opportunity of $56B.
The market for digital product passports is projected to achieve a value of $0.9B by 2030, with a CAGR of 30.8% from 2024 to 2030.

What they’re saying:

“Tagging a product and enabling a digital storytelling is an amazing conversation starter for the sales assistants in our boutiques. It increases the conversion rates and ensures that the customer verifies the ownership of their product, creating a new channel for direct engagement that never existed before.”

– Lorenzo Bertelli, Head of Marketing & CSR, Prada Group

“Currently we don’t get back any data from wholesalers, but now we can engage directly with those customers. DPP is very interesting from an omnichannel perspective.”

– Stefano Rosso, Chairman, Maison Margiela

Be smart: By 2025, 75% of luxury brands are expected to adopt DPPs to comply with regulations. Brands have started leveraging web3 technology for loyalty and product-based experiences. Tokenized DPPs can reduce costs by up to 20% compared to cloud-based solutions.

Punchline: DDP, driven by upcoming EU regulation, enables brands to connect directly with consumers, bypassing multi-brand retailers.

By linking each physical product with a unique digital twin, they esbalish a secure and permanent communication channel. This unlocks CRM data, drives revenue, enhances loyalty, and creates immersive customer experiences.

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🌎 Crypto & Macro

Paxos has launched the Lift Dollar (USDL), a yield-generating stablecoin pegged to the U.S. dollar and regulated by the FSRA of Abu Dhabi Global Market. USDL offers a daily yield around 5%, akin to returns on U.S. Treasury bonds, and will initially target users in Argentina through distribution partners. Link
Base's TVL on Ethereum layer-2 has surged to $8.05B, surpassing Optimism's OP Mainnet, making it the second-largest Ethereum Layer2. Link
MoonPay’s PayPal offering is live in the EU & UK. Link
MicroStrategy plans to raise $500M to buy BTC. Link
Andrew Tate's promoted memecoin, Daddy Tate (DADDY), has surged to a $300M market cap despite allegations of significant insider trading. Link

🎮 Gaming

Arbitrum's $237M gaming proposal passed with 76.3% approval, aiming to boost ecosystem growth despite concerns over token dilution and operational clarity. Link
Uniswap has acquired “Crypto: The Game” unlocking new revenue streams through in-game purchases, sponsorships, and others. Link

🧠AI + Metaverse

Apple Intelligence🍏

Apple has recently introduced its AI strategy, “Apple Intelligence” (AI; smart branding?) in partnership with OpenAI at WWDC 2024.
Apple has created a new system called Private Cloud Compute (PCC) to process complex data with larger foundation models for Apple Intelligence.

What you need to know:

Apple integrates ChatGPT across devices for systemwide writing and image tools, prioritizing privacy with no storage of requests and obscured IP addresses
Siri will be upgraded with enhanced user interactions with seamless access to AI capabilities for personalized responses.
Apple won't pay OpenAI; instead, OpenAI expects Apple’s exposure to boost $20/month subscriptions
PCC ensures data privacy by preventing retention of query information, utilizing secure Apple silicon storage and end-to-end encryption to safeguard against unauthorized access.
“Apple Foundation Models”, trained on AXLearn framework, are designed to deliver robust and personalized AI capabilities and reduce the latency.

By the numbers:

Global sales of Apple's iPhones dropped by 10% in the first quarter of 2024, reaching a six-year low.
Apple's stock soared 7% on the announcement of Apple Intelligence, boosting its market cap to a record $3.18 trillion.

Meanwhile: Elon Musk hinted at the possibility of developing a 'Grok phone' in response to a request, suggesting it might become necessary if Apple proceeds with integrating OpenAI.

Why it matters: Apple has approached consumers directly with a comprehensive demo and directly addressed their privacy concerns with Microsoft Copilot+ and Google Bard. However, this trade-off is going to be challenging while mitigating the pitfalls of generative AI.

🪙 Regulation Update

With the EU's Markets in Crypto-Assets (MiCA) regulation deadline on June 30, the crypto industry and stablecoin issuers face uncertainty over meeting new requirements. MiCA aims for regulatory clarity, but concerns about preparedness and potential disruptions are growing. Link
South Korea’s Financial Services Commission (FSC) issued guidelines to clarify when NFTs are virtual assets. Effective July 19, 2024, under the Virtual Asset User Protection Act, collectible NFTs with limited market transactions are excluded from crypto regulations. Link

💰 Money Moves

New funds & grants:

Paradigm announced a raise of a third venture fund with $850M for "early stage crypto companies". Link
Manta Network launches $50M ecosystem fund to boost early-stage projects with grants up to $50K, aiming to foster the development of zero-knowledge applications. Link
Polygon launches $720M grants program. Link

Funding rounds:

Mistral: Paris-based AI startup raises $640M. Link
Nexus: Lightspeed Venture Partners and Pantera Capital led $25M Series A. Link
Layer3: Token-distribution protocol raised $15M co-led by ParaFi and Greenfield Capital. Link
Ava Protocol: Eigenlayer AVS completes a $10M funding round. Link
Squads Labs: Blockchain firm raised $10 million in Series A funding led by Electric Capital for Smart Wallet. Link

That’s all for now, folks. Thank you for being part of the journey.
Talk soon,

– Marc

PS: Follow me on LinkedIn and X for shorter insights.

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