In the wild world of Web3 where trust and credibility are scarce, a project’s reputation holds the key to success. Picture last year’s domino effect from the downfall of Terra to the exposure of FTX’s dodgy dealings casting a shadow over the industry’s integrity. Add in the U.S. Security and Exchange Commission’s crackdown on cryptocurrency, mix it with ever-confusing rapidly evolving technology, and you’ll see why reputation is like a precious gem.
There are three crucial factors to consider when building and shaping your reputation in Web3, this includes transparent communication, engaging the community, and forming key partnerships with industry leaders. Let’s break it down.
Transparent communications in Web3 can be difficult, as some parts of Web3 thrive on anonymity and security. Yet commitment to open and honest communication on public forums is key to reputation building. If your users trust you to tell them what is happening, even when things go awry, you’re demonstrating that you are accountable, reliable and responsible.
While you don’t have to share everything all the time, there are three situations where transparent communication is a must:
- During a market downturn: Proactively sharing your strategies, risk management plans, and market insights can soothe nerves and build confidence.
- In times of crisis: Maintaining an honest and open dialogue with stakeholders via X (formerly Twitter), blog posts and public forums, through regular updates, addressing concerns, and offering insights into what happened will enable you to tackle challenges more effectively. It’s about nipping problems in the bud before they escalate.
- When launching a product or offering: When preparing to introduce a product or development, a solid communication plan should outline how you’re unveiling the product, why it is important and how you want it to be perceived. The tech does not actually speak for itself and leaving room for interpretation can lead to misunderstandings that can hinder a brand’s reputation.
Here’s an example of why transparent communications are important: When Ledger, the maker of cryptocurrency hardware wallets, announced the launch of Ledger Recovery earlier this year, they failed to clearly outline the details and functionality of the update. This caused confusion surrounding the product and led users to question the security and privacy of their data and even worse, Ledger’s entire legacy.
Concerns voiced by users and the crypto community on Twitter, as the social media platform X was then known, suggest a perceived misalignment with Ledger and crypto’s core principle of security. As a result, Ledger had to spend a lot of time managing the situation by communicating with users, stakeholders and the media, which could have been avoided if they’d had clear communication from the beginning.
Engage in productive discourse
The crypto industry is a vibrant and interconnected community that thrives on community engagement and interaction. It is the combined power of engaged communities that bolsters the reputation of a project. Ethereum is well known for a highly engaged and passionate community of developers, investors and users. This culture of collaboration and innovation is highlighted through the many key industry conferences that gather the community together such as ETHDenver, EthCC and Devcon.
Engagement comes in several forms, but the main ones are conferences, social media forums like “X spaces,” webinars, podcasts and media publications.
The power of consistent and active engagement in Web3 was demonstrated by Binance when the exchange swiftly and succinctly responded to news that they were being sued by the SEC in June, earlier this year. Binance quickly took to X to acknowledge the filing, confirm that the news was true and provide a clear outline of the upcoming changes that would impact the platform. This worked to appease users and prevent a mass outflow. This was not the first instance where Binance excelled in leveraging engagement to navigate challenges. When FTX was exposed last year, Binance was very quick to update its users as well. This adeptness at communication has earned them a reputation for good crisis management.
Team up with partners
Reputation in Web3 is closely tied to those you choose to associate with. Collaborating with reputable projects, influencers or industry leaders allows individuals to form strategic partnerships that amplify credibility and visibility.
The benefits of partnerships include the possibility of joint ventures, co-marketing campaigns and sharing resources. Partners can also provide valuable insights and expertise that will work to enhance the reputation of a company, as they are seen as informed and well-connected participants in the dynamic world of crypto.
A good illustration of a mutually beneficial partnership is the alliance between blockchain infrastructure Paxos and the online payment system PayPal. Originating in 2020, Paxos enabled Paypal to directly purchase, hold and sell cryptocurrency from its wallets. A significant milestone occurred in early August this year when they launched a USD stablecoin on PayPal. This was seen as a pivotal moment in crypto history, as Paxos, a regulated company, issued the token, providing holders with greater protection and facilitating the seamless transition between crypto and traditional financial activities.
From this partnership, Paxos gained access to a user base of 435 million worldwide and for PayPal, the move established them as strong contenders in the race to onboarding the next billion to Web3.
Reputation ultimately builds trust
Reputation in Web3 is ultimately about trust in the technology that is truly decentralized. This means that the reputation of a project or the entire Web3 industry shouldn’t be at the mercy of the actions of any individual or particular group.
Up until now, Web3 projects have generally focused on building the tech more than on maintaining their reputation. But what’s the point in having great underlying technology if no one knows about what your project or brand is about? It is time for projects to move into the next phase of building and to start thinking about communicating what they do and explaining why it matters. This is where a well-thought-out strategic communication plan is key to engaging with your community and key partners in the industry. Investing in building a strong communications and marketing team is an under-acknowledged risk management plan.