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Recently, we examined why web2 toolkits like Reddit Pro aren’t the best option for brands that want to engage consumers and retain loyalty across their products and experiences.
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So what is? Drumroll, please.
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From art to sports, luxury fashion, and even credit cards, Web3 is ushering in an entirely new set of tools for brands that want to build deeper connections with communities across dynamic environments that they can customize to their greatest needs.

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Let’s break down some of the benefits we talked about last week in greater detail, starting with web3’s ability to help brands:

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1. Gain insights into customer activity and behavior across both online and real-world touchpoints.
2. Leverage new analytics by connecting data from wallet signatures and onchain activity to build richer profiles and segment audiences more effectively.

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Recently, wallets-as-a-service startup Magic raised $52mm from PayPal and others. This post breaks down what 'wallets-as-a-service' means, introduces similar solutions in Paper, Crossmint, Sequence, and Coinbase, and how brand and agency leaders should think about this within their broader consumer engagement strategy.

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'Wallets-as-a-service' is not about hardware wallets like Ledger for self-sovereign diehards, or self-hosted web wallets like MetaMask that require safely storing a seed phrase offline and paying your own gas. It's not for web3 natives, in other words. It's for onboarding the mainstream!

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'Wallets-as-a-service' are one of several emerging technologies that make up the growing 'web2.5' trend in general, which is about making selective decentralization trade-offs in pursuit of a seamless user experience that still delivers on digital ownership and interoperability.

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How 'wallets-as-a-service' work, and how brands and consumers benefit

If you've ever tried to set up a web3 wallet, you know how much friction is involved.

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Instead of a simple email-password, you are given a 'seed phrase' of random words that you need to write down and store offline for maximum safekeeping. This is how web3 maintains full decentralization: no one but you is capable of gaining access to your account or acting on your behalf. This is great for certain use cases when users are ready to climb the learning curve, but for onboarding new consumers to the space with sometimes free-to-earn digital assets, it's just overkill.

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Of course, the opposite of a fully decentralized wallet is a fully custodial wallet: one in which the brand owns, controls, and is liable for the users' wallets and their contents. This approach may be right for some brands (though we at Mojito often question it), but for others looking for a middle ground: 'wallets-as-a-service' was born.

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Wallets-as-a-service use an underlying technology called multi-party computation.

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Instead of asking consumers to store their own private key with a seed phrase offline, the private key is 'sharded' into three fragments of data, two of which are needed in order to control the wallet. Each is encrypted and authenticated uniquely:‍

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1. Email/SMS -- One fragment is tied to the consumer's email or phone number, and requires proof of ownership through a one-time password like 2FA.

2. Local Device ID -- Another fragment is tied to the consumer's physical device or browser that was used to create the wallet.

3. Vendor Solution -- The third fragment is stored by the wallet-as-a-service provider with a range of security options, some better than others.  

The consumer can operate the wallet with two of the three shards, while the wallet-as-a-service company can never unilaterally gain control.

THIS IS ALL IN THE BACKGROUND.

The consumer is never aware or bothered by any of this. This makes for a seamless wallet experience where users don't pay gas, and brands don't take on unnecessary risk or liability because the wallet is also non-custodial.

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Our 0.02 ETH 🍃

Mojito has met with all of these teams, tried all of their tech, and used multiple in the wild with customers.

• Magic -- The most well-funded, largest headcount, and longest tenured team, however, also the priciest and most centralized in terms of security.
  
  
• Paper -- The fastest, most secure, and most white-labeled product we tested on the market with the most flexible team and approach to partnerships.
  
  
• Crossmint -- The most b2b2c focused in terms of creating a direct-to-consumer connection with their own brand and family of growing apps.
  
  
• Sequence -- The most gaming focused, and farthest ahead on smart contract wallets (ERC-4337).
  
  
• Coinbase -- Mobile-only 'wallet-as-a-service' right now, but already has one of the best self-hosted wallets with their exchange and on/off-ramps plugged in.

At Mojito, we believe the future of consumer engagement is onchain.

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‍This is important for you to know -- brand and agency leaders -- but consumers should not need to know or understand this any more than 'omnichannel'. That's what web2.5 is all about, and wallets-as-a-service are a helpful piece of that puzzle (dynamic NFTs, too!), which will continue to evolve.

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The key thing to solve for isn't your wallet provider. They're largely at parity and easily interchangeable / upgradeable. The key thing is your holistic product offering, which isn't influenced or constrained by your 'wallet-as-a-service' provider, but instead unlocked by use-case solutions like Mojito, which has wallet-as-a-service built right in.

Mojito enables brands to launch end-to-end web3 consumer engagement campaigns including wallets-as-a-service, fiat and crypto payments, free mint and paid drop mechanics, white-label secondary marketplaces, token-gating, and onchain rewards.

With Mojito, you can tailor your brand experiences for mainstream users only, web3-natives only, or both.

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As always, we love talking web3 consumer engagement with brand and agency leaders. Whether you're sourcing tech solutions with a clear scope, timeline and budget in mind, or you're just getting started, Mojito can help you every step of the way. Share your contact details and our team will reach out for an exploratory chat. Get in touch.

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NFT ‘metadata’ has mostly consisted of JPGs, GIFs, and MP4s, and the more advanced collections have traits and rarity. Critically, creators haven't changed the metadata, in some cases they even ‘froze’ it to prevent tampering or ‘rugs’ post-mint.

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But innovative brand and agency leaders are poking holes in this dogma, and starting to realize what is possible with ‘dynamic metadata’ – updating a consumer's NFT metadata over time. It’s not just about possible new artforms or content, it’s about the fundamentals of how brands and agencies leverage consumer data itself.

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“NFTs: your ticket into a brand’s action," wrote MediaMonks Web3 Director Michael Litman.
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‍‍"We’re entering an ownership era where everyone has a chance to own a piece of the action. This ownership partly lies in NFTs or digital collectibles, which can be many things—an artwork that evolves over time as users get involved, a digital object, and more.”

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How will brands and agencies personalize experiences and tailor ads in a future without cookies? How will developers create unified consumer experiences across disparate brand properties or different brands altogether? How can consumers achieve a more elevated digital experience without compromising on privacy?‍

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Dynamic NFTs may be part of the solution. It’s not a consumer-facing term by any means, but it may soon become a key piece of every brand and agency's consumer data and engagement strategy. Here’s an explainer, today’s most helpful use cases, and where we see Dynamic NFTs going at Mojito.

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What are Dynamic NFTs?

First it’s worth clarifying: What is an NFT?

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An NFT is an unique digital asset owned by a single individual or entity at any given time. This digital asset maintains its own records, too: NFT 'metadata' can reference a near-unlimited amount of content, code, and raw data. When consumers 'connect wallet' to websites or apps, the brand can 'see' what assets they own and 'read' the metadata.

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Traditionally, creators ‘froze’ or otherwise swore to never change their NFT metadata after minting. Imagine buying a physical product off the shelf, and by the time you brought it home, the manufacturer had somehow altered it completely, or even somehow ‘deleted’ it. This is why best practice was to never change the metadata: otherwise, consumers couldn't trust its lasting value.

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But then some people got creative, and wanted to play with the idea of dynamic onchain art where the work changes over time, and not only that, but changes based on signals it receives from the internet (!!). One of the earliest and most famous examples of this is the Bitcoin Volatility Art by Matt Kane that changes daily based on the past 24 hours of Bitcoin trading activity.

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Our 0.02 ETH 🍃

• Bitcoin Volatility Art dynamically updates its metadata based on recent market trends, but there's no reason it couldn't be driven by anything else. What offchain sources of engagement data would you wish to capture, reflect or incentivize onchain?
  
  
• Brands and agencies don't necessarily need to do anything other than 'update' the NFT metadata with these touchpoints, and possibly maintain an omnichannel 'consumer profile score'.
  
  
• This would then be 'readable' by any website or app to enable personalized experiences on first-party and third-party platforms. These insights have gotten people in our industry thinking….

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LaMelo Ball (NBA) - Dynamic Content

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‍In 2021, NBA star LaMelo Ball sold 10,000 digital collectibles in partnership with Chainlink, a company that specializes in bridging offchain and onchain data, with the premise that if Ball should win the Rookie of the Year award later that season, the collectibles would 'evolve in a more powerful version'. This means dynamically updating its visual appearance as well as its 'rarity', an important aspect of collectibles markets.

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Our 0.02 ETH 🍃

• Imagine fantasy sports, reality TV, or other 'live data' enhancements driving desirable outcomes in a consumer's chosen collectibles, say, during a prediction or even betting contest. What would be right for you?

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Australian Open (tennis) - Dynamic Content & Rewards

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‍In 2022, the Australian Open sold 6,776 digital collectibles called AO ArtBalls in partnership with Hawk-Eye, a company that linked each NFT to a specific area on the court and triggered dynamic updates to corresponding NFT for each match point.

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AO Artball 'lucky winners' each earned 'upgraded' NFT artwork, but also free redeemable tickets to the next tournament.

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Our 0.02 ETH 🍃

• Upgrade the artwork when relevant, sure, but add loyalty points or access to free redeemables dynamically within the same NFT metadata, and the reward is suddenly that much more real and valuable.

‍gmoney & 9dcc (fashion) - Dynamic Rewards & Community

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Crypto-native lifestyle brand 9dcc incentivizes weekend wear amongst its ambassadors through flash mini-games that generate loyalty points and is only playable if you have the NFC-chipped garment nearby (or preferably, on your person).

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Founder and CEO gmoney designed these 'network points' to be a dynamic element within the 9dcc ecosystem, stored offchain but tied to each consumer's onchain identity.

"How do you find and incentivize those fervent brand people to become bigger ambassadors? That’s what I’m trying to mess around with." @gmoney

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Our 0.02 ETH 🍃

• The future of consumer engagement is onchain. But that doesn't mean that literally all the data is onchain, public, transparent and immutable. Here we see gmoney decide to store his network points offchain for privacy but with an onchain reference (i.e. wallet, NFT pass) to leverage within his own platforms or others where he shares permission.
  
  
• This is indicative of a broader trend within web3 called web2.5 (coined by yours truly!). Rather than decentralizing everything, this term refers to applications that blend centralized and decentralized tech in order to achieve a necessary balance between desirable web3 features, a smooth and familiar user experience, and corporate risk management. This is our specialty at Mojito!

What are the brand benefits for Dynamic NFTs today?

You can’t sell consumers a better database. You need to sell applications and benefits instead. So what can brands and agencies offer with Dynamic NFTs today?

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• Onchain Loyalty Points – Distribute fan or membership passes, then increment/decrement their loyalty points ‘in the metadata’ every time they interact with your brand or redeem rewards. Omnichannel, omniplatform, cross-brand. No fungible tokens necessary. Lightest possible legal and operational lift for web3 rewards program.
  
  
• Personalized Token-Gating – Deliver richer experiences and tailored rewards informed not just by token ownership alone, but all relevant engagement data including social, ecommerce, and IRL. Gate websites, apps, games, and events. Generate and distribute additional points at the point of ‘check-in’ for surprise and delight.
  
  
• Memberships/Subscriptions – Sell time-access passes with expiration dates in the metadata. Consumers may keep their passes after expiration for limited access to certain community spaces or re-entry discounts, but to retain access to members-only spaces, they would need to pay a subscription fee or simply ‘buy more time’ on their expiration date. Token-gates would read not just the presence of the pass but the expiration date within its metadata to determine whether to let the user through.
  
  
• Physical x Digital Enhancements – Pair NFC-enabled spaces, objects, and garments with digital rewards schemes to drive IRL engagement and a bridge from geo-constrained, time-limited physical experiences to boundless, timeless digital ecosystems. Making a bit of a comeback, the humble NFC chip delivers a more delightful user experience than QR codes, and is much more technically capable, too, meaning many clever ways to ‘read’ and ‘update’ a user’s NFT metadata through ‘proof of proximity’ engagement campaigns

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"Web3 wallets are the new cookies but the difference is that, this time, it belongs to the customer," said Salesforce SVP Marc Mathieu.
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‍"The big difference is that these people are no longer just consumers, they want to be co-creators co-innovators, collaborators, and co-beneficiaries.”‍

Here's how to get started with Dynamic NFTs for your brand:

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1. Identify 2-5 key engagements you want to track and reward digitally.
2. Define 1-2 valuable rewards and thresholds for engagement.
   
3. Contact Mojito to get it all done, on budget and on time.

As always, we love talking web3 consumer engagement with brand and agency leaders. Whether you're sourcing tech solutions with a clear scope, timeline and budget in mind, or you're just getting started, Mojito can help you every step of the way. Share your contact details and our team will reach out for an exploratory chat. Get in touch.

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‍Sign up for news, trends and analysis on tap. Join 2,300+ brand leaders going deeper into web3

‍Image credit: RTFKT x Nike Cryptokicks

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Here’s an explainer on Redeemable NFTs, today’s most helpful use cases and build considerations based on a number of active projects and exciting conversations with brand leaders at Mojito.

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What are Redeemables?

Redeemable NFTs are a digital token that can be exchanged for a physical good or service in the future (e.g. physical items, pre-sales, tickets, merch, physical artwork, special offers, access). Along with RWAs (real-world assets) and asset-backed NFTs, these terms are all used interchangeably, so for the purposes of this explainer, we’ll call them Redeemables.

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Redeemables are gaining significant traction as a way for brands to seamlessly tie together physical goods and digital twins, giving the brand enhanced engagement/loyalty opportunities as well as net new revenue streams.

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What are the brand benefits of offering Redeemables?

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• 🛍️ Offers consumers tangible value | This makes a digital NFT more attractive to potential primary and secondary buyers because they can at least peg the value of the NFT to something tangible in the real world. 
• 🖼️ Better liquidity and optionality for consumers | Especially for traditionally illiquid and siloed markets like art, handbags, sneakers, watches, or wine & spirits, NFTs offer brands and buyers more transparency and optionality when buying and reselling. 
• 💹 Secondary market revenue for brands | Every time the Redeemable NFT (which represents the physical good or service onchain) trades hands, the brand can receive a piece of that sale through a royalty enforced on-platform and possibly beyond. 
• 💰New revenue streams for brands | Tap royalties from the secondary market. Generate incremental revenue from preorder trading. Incentivize stockpiling with future rewards and benefits.
• 🧐 Authentication to ensure a premium product experience on the secondary market | Redeemables can also offer authentication assurances to ensure an excellent Brand experience in the primary and secondary. Examples include a Certificate of Authenticity (e.g. Nike Air Force 1s or Ticketmaster tickets), or storage assurance (e.g. temperature, packaging, light for Wine) or insurance certificates (luxury products).  
• 👀 Open-source visibility of redemption events | When a redemption occurs onchain, one NFT is submitted to the brand and another NFT from a 'redeemed' collection' is received in its place. This method enables distinct clarity between Redeemed and Unredeemed NFTs onchain while retaining the ability to market to users based upon onchain data and assets.

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What are some notable use cases? 

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Retail 

Nike’s Cryptokicks are digital collectibles that can be redeemed for their physical counterpart sneakers in a process RTFKT calls ‘Forging.’ During Nike x RTFKT’s Forging events, "holders of eligible digital collectibles can redeem for limited made-to-order physical products. Forging events last for a limited time, so always check for dates and set reminders."

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Premium fashion

Cristóbal Balenciaga’s ‘To the Moon’ drop came with redeemables such as Balenciaga gear, gift cards to designer Brands and even the 70-year-old drawings by Cristóbal.

Sport

Every Australian Open tennis AO ArtBall NFT was redeemable for 2 tickets to the Australian Open tennis grand-slam in 2023.

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Premium beverages

Glenfiddich single malt Scotch whisky launched 200 limited-edition ‘Chinese Lunar New Year NFTs’. Each NFT is linked to a physical bottle of Glenfiddich 21 Year Old Gran Reserva single malt and serves as a digital receipt verifying ownership and authenticity. NFT collectors can hold it, resell on an NFT marketplace, or redeem it for the physical bottle.

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Considerations for creating Redeemables

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What happens to the NFT when someone redeems the real-world asset? In short, it depends on how the brand builds it.

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A number of options are possible with differing pros and cons, with one winning approach emerging. 

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1. 🔥 ‘Burn it’

The NFT is burned when the consumer redeems the physical good or experience. The NFT is no longer functional or ‘owned’ by anyone.

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Pros: simplest to execute. campaign is over.

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Cons: ‘Burning NFTs’ removes people from your token-holding community, which brands very typically shouldn't want to do.

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2. 🛍️ ‘Trade it in’‍

Consumer sends the NFT to the brand’s treasury wallet, and once received, the brand ships them the physical item. The NFT is now owned by the brand.

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Pros: the brand owns the NFT supply and could choose to resell to other holders at a later date.

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Cons: the brand loses a valuable customer, the consumer is no-longer invested in the success of the NFT project, only enjoying the lifetime value of the physical item. It signals that the brand sees more value from owning it than the customer does.

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3. 📭 'Stamp it’

When the consumer redeems the physical good, the NFT metadata is updated to distinguish [REDEEMED] v [UNREDEEMED].

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Pros: Consumers are still invested in the success of the NFT project. Maintaining ongoing onchain continuity is a priority for both the brand and holders.

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Brands get access to a secondary market, authentication assurances, new revenue streams and opportunities to create imaginative loyalty tiers that build LTV.

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Consumers get to choose whether they claim the physical item. Secondary buyers get access to a liquid open marketplace with assurances the NFT will come with the right to claim the physical item.

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Cons: Depending on the secondary marketplace experience, consumers may not be able to decipher between the REDEEMED and UNREDEEMED markets and offerings with this technical method, which can result in buyer regret and negative sentiment from purchases of NFTs where the physical item was already redeemed. This is easily managed by issuing a second token. How? Read on:

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Serving up a ‘Stamp it’ example from tennis

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To crystallize the ‘Stamp it' concept, we’ll unpack a live brand case study where physical items were linked to the NFT, in this example as ‘tickets’ to a live event.

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For any brand leader in another vertical, the ‘tickets’ could easily be interchanged with any physical POS item like premium handbags, sneakers etc. 

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NFT Collection 1 

The tennis grand slam event Australian Open launched an NFT project with 6776 NFTs in Collection 1 uniquely numbered #0001 - #6776. The artwork from Collection 1 are tennis balls wrapped with art hence AO ArtBall.

The Redeemables

Every Australian Open NFT from Collection 1 gets to claim 2 tickets to the Australian Open 2023 finals week starting 20th January 2023, for free, redeemed via a simple token-gated experience.

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NFT Metadata on Collection 1 was updated

When consumers redeemed their tickets, the NFT metadata was updated to show REDEEMED. The metadata makes up the NFT and is traceable on the blockchain.

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Additional NFTs from Collection 2 are issued to holders 

At the same time, for consumers who redeemed the tickets, the Australian Open issued them a new NFT from Collection 2 [CLAIMED], directly to their wallet. Collection 2 NFTsfor example could have different artwork, a Certificate of Authenticity (COA) that provides extra validation that the Ticketmaster tickets are genuine.

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Why? This is two-fold

1. The Brand, Australian Open can isolate which NFTs are associated with [CLAIMED] tickets, distribute tickets to holders via Ticketmaster, track trading data, the floor price of Collection 1 [UNCLAIMED] vs Collection 2 [CLAIMED], reward this new tier of engaged customer i.e. the first claimers of Redeemable tickets, proof of attendance etc; and
2. Potential secondary NFT buyers on the secondary market can see which NFTs have tickets [UNCLAIMED] from collection 1, make a bid with confidence they have the right to receive the 2 tickets. The COA can travel with the tickets.

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Pre-order visibility

Australian Open can forecast token holder attendance at the stadium gates and revenue holders may spend in the precinct; and has enriched data as to which NFT holders are most likely to attend their live experience. 

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Our 0.02 ETH 🍃

We recommend Brands considering adding Redeemables to their loyalty stack issue a second NFT when the physical item is claimed so potential customers can easily distinguish between which NFTs on the secondary have had their physical item claimed. Brands get to track trading data between claimed and unclaimed redeemables and reward a new tier of engaged customers to grow LTV.

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The future of Redeemables with Mojito

We’re weeks away from launching a live example of Redeemables, we can’t wait to share with you. If you’re interested in building Redeemables into your loyalty stack? Get in touch

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Image credit: Starbucks

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Odyssey demo

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Starbucks knows loyalty better than most. The Starbucks Rewards program boasts 50 million customers and $15 billion in annual revenue, and the new Starbucks Odyssey NFT experience is the company’s first effort to use web3 to reward loyalty. We got a demo, and let us tell you: this is not your standard NFT drop.

“The experience allows members to participate in a series of entertaining, interactive activities called ‘Journeys'. Once a Journey is complete, members will earn collectible ‘Journey Stamps’ (NFTs) and Odyssey Points that will open access to new benefits and immersive coffee experiences that they cannot get anywhere else.”

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We got a demo, and let us tell you: this is not your standard NFT drop.

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Key features:

• Friendly terminology: As we said in our 2023 web3 predictions post, Starbucks avoids the term ‘NFT’ and uses ‘digital collectibles’ instead. They believe this is more descriptive, and won’t alienate people turned off by NFTs and crypto.
• Non-speculative: NFTs are tradeable assets, even if they also carry other utilities. Starbucks says the NFTs are ownable perks for their gamified loyalty program, and not meant to be high-value speculative assets. But already there have been unexpected multiple 5-figure sales from this collection.
• Web 2.5 for crypto newbies: Starbucks Odyssey users can purchase Stamps directly with a credit card, no crypto or self-custody wallet required. While the NFTs are onchain, Starbucks is using Nifty Gateway’s custodial wallet to ease UX friction.

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Our 0.02ETH 🍃

We're excited to see how this will play out. Starbucks may generate some unexpected cash from the Stamps secondary market, but Stamps therefore may not have the kind of impact on loyalty they had intended.It will be interesting to see whether their userbase will always be okay with custodial wallets especially in low-risk situations like Starbucks NFTs, and if so, how web3 interoperability will be unlocked for brands and users alike.

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Covered by Mojito, the web3 consumer engagement platform. Empowering brand leaders with powerful tools to drive consumer engagement, sales, and loyalty for all levels of web3 maturity.

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Image credit: Starbucks

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‍What launched?

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Starbucks launched its second NFT drop ‘The Starbucks First Store Collection’, a 5k collection of ‘Stamps’ priced at $99 with 1,500 bonus points to redeem against a range of benefits via their web3 loyalty program Odyssey.  

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Catch up quick: The Starbucks Odyssey web3 loyalty program that gamifies engagement with the company’s newest content. Consumers win NFTs for correctly answering trivia, and collecting enough NFTs can unlock exclusive Starbucks products and experiences.

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‍How it works: Starbucks Odyssey prompts members to complete real-world and interactive mini-games called ‘Journeys’ and how to earn more NFTs in return for in-store purchases. This is how consumers accrue loyalty points in the form of NFTs, which can then be redeemed for their benefits of choice (or sold on the secondary market).

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‍What’s new? Starbucks revealed the details of its 3 tiers of benefits, receiving much love from its dedicated brand advocates. Members can engage-to-earn their way up the reward tiers by completing more mini-games, or simply buy their way in. {adjust when send} At the time of send, the floor for Starbucks Stamp NFTs is currently $114 with $206k in trading volume so far

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Our 0.02ETH 🍃

From the early response on crypto twitter, offering members choice across an array of Starbucks perks was a great strategy to entice the range of coffee lovers it serves while driving the triple-bottom line: monetization,, brand education and doing good. Nudging high-value customers to learn the latest product talking points in exchange for discounts on their favorite drinks is the cherry on the top for their brand team.

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Covered by Mojito, the web3 consumer engagement platform. Empowering brand leaders with powerful tools to drive consumer engagement, sales, and loyalty for all levels of web3 maturity.

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Signup for news, trends and analysis on tap. Join 2,000+ brand leaders going deeper into web3