As we enter into the second month of 2024, many layer-1s have the opportunity to build a more robust brand. After a big slump in 2022, the last 12 months have brought some much appreciated gains for blockchain projects. With Bitcoin up 60% over the past year and Ethereum posting gains of 29% over the same period, many blockchain tokens have followed suit. The increasing token values give layer-1 treasuries more resources to invest in their communications and branding. The question is, how will they use the money this time?
Big splash, small impact: The problem with high-profile campaigns
In recent years, many blockchain protocols have invested in high-profile, splashy marketing campaigns that have reached millions of eyeballs. For example, the research firm Nielson projects that blockchain sports sponsorship spending, such as Tezos’s £20m-per-season kit deal with Manchester United, is expected to reach $5 billion by 2026.
But while this type of promotion builds the name recognition of a layer-1 and may help people remember a logo, it tells them little about the underlying network. If you were to stand outside Old Trafford on a Saturday afternoon after a match and ask 100 Manchester United fans what Tezos is and how it is different to Ethereum, only a miniscule fraction of them would be able to explain.
This raises the question of how communications budgets are being allocated in the layer-1 space, what type of brands are being built, and how they differentiate from each other. For most newcomers to a layer-1 protocol, the website is the first port of call. This is the first place prospective users or developers go to gain an understanding of the network, learn its advantages, and experience the brand. We recently analyzed the messaging on the websites of 10 leading layer-1 networks using a rigorous quantitative methodology to see what it would tell us about brand positioning in the space. A selection of our results and explanation of our methodology were published in the INACTA Global Protocols Report 2024. Below is a brief summary of what we found.
The challenge of differentiation: A tangled web of promises
Our research identified eight key narratives that drive the communication of layer-1s: earning potential, revolution, scale of ecosystem, trust, performance, developer friendliness, community and environmental impact. The different narratives appeal to different clusters of user needs and emotions that we call positioning zones. For example, while “revolution” taps into a lust for adventure, rebellion and social affirmation, “trust” appeals to a much more conservative need for safety and security.
Over the course of our analysis, we discovered that rather than trying to stake out a clear and consistent positioning, many layer-1s try to appeal to contradictory narratives simultaneously. It is almost as if they are still selling the concept of blockchain as a whole, as opposed to their individual protocol. As a result, some of the biggest layer-1 brands are too broadly defined to stand out, promising to be both revolutionary and reassuring, cutting-edge as well as established, enterprise-focused as well as community-driven.
In the INACTA report, one of the examples we cite is Cosmos. The screenshot below shows a prominent section from the Cosmos website which appears on the main page just below the fold. The headline clearly signals that Cosmos is the “most trusted” layer-1 solution for building value. This is a big claim, but how is it backed up? You might expect the text below the headline to discuss the security of the protocol, the thoroughness of penetration testing, or the bug bounty program. Or perhaps a comparison table showing Cosmos’ byzantine fault tolerance (or some other key security stat) compared to other layer-1s. Alternatively, the site could provide “social proof” that Cosmos is trusted by using a list of high-profile clients or some impressive testimonials.
As you can see on the website, the real site adopts none of these options. Instead, the body text and accompanying statistics briefly touch on a range of other topics such as innovation, low fees, speed and eco-friendliness, none of which are directly related to trust. There is no real sense of why the headline belongs to the rest of this section and overall, it reads like a collection of generic blockchain statistics rather than a coherent story or message.
Why do these numbers matter? What benefit will they bring to developers and users? What practical and emotional needs are met? Visitors are not given clear answers to these questions and everything is jumbled together.
What are you looking at, punk?
Other than mixed messaging, another common issue we encountered is more stylistic in nature. Some layer-1s tend to use the language of rebellion and revolution, regardless of who the target audience is. From medical data, to supply chain, self-sovereign identity and international payments, the applications of blockchain are myriad. Yet often, layer-1s use the standard blockchain tropes of disruption, freedom and revolution, without stopping to think if that voice is appropriate.
For example, Cardano’s website contains a mix of references to science and revolutionary rhetoric. The first paragraph emphasizes the project’s trustworthiness, citing “peer-reviewed research”, “evidence-based methods”, and “unparalleled security”. The next paragraph shifts focus to the project’s mission to “redistribute power from unaccountable structures to the margins”. This abrupt shift in tone could be jarring for readers. If every problem is projected through a cypherpunk lens, this may lead some potential users or developers to feel excluded.
Finding the “Goldilocks Zone” for a layer-1 brand
We often hear blockchain described using space metaphors such as “ecosystems”, “galaxies”, and “portals”. But looking through the eyes of consumers, blockchain is a universe in which many stars look the same.
When allocating their communications budgets over the next 12 months, layer-1s should consider focussing less on building hype and more on building a brand. To do this, they need to know themselves and what makes them different. Memorable brands are the result of consistent and coordinated communication across all touchpoints and channels over the long-term. This can only be achieved if the brand has a clear sense of its identity and a concrete conception of its place in the wider market.
While the huge potential of Web3 makes it tempting for brands to make grand, sweeping statements about goals and ambitions, developers and users now want to hear a more grounded, clear and consistent story about what blockchain can do for them.
This blog was just a small snapshot of our findings. To read about them in more detail, check out page 78-83 of the INACTA Global Protocols report and if you have any comments or feedback, share it with us on LinkedIn — we’d love to hear your take.