Beyond Starbucks Odyssey-A More Inclusive, Efficient, and Secure Technical Solution for Web3 Commerce

Since the initial announcement in September 2022, Starbucks introduced its first-ever purchasable NFT ‘The Siren Collection Stamp’ in March 2023, establishing itself as a pioneer among Web 2 brands transitioning into the Web 3 space. This is another brave step for Starbucks, a true pioneer in the brand loyalty space.

Starbucks recognises the evolving customer-brand relationship that is driven by technology and aims to create a more participatory and community-focused experience. Their NFT-based loyalty program, Starbucks Odyssey, allows customers to become stakeholders in the brand, enhancing their sense of ownership and community engagement. The program offers personalised recognition and fosters a stronger community connection. By adopting a Web3-based system with NFTs as a standard value, Starbucks can expand its loyalty program globally, overcoming challenges posed by different tech stacks and POS systems in various countries.

In summary, Starbucks Odyssey function as an expansion of the Starbucks Rewards program, offering users the opportunity to earn digital collectible stamps (NFTs) by completing journeys and acquire limited-edition stamps featuring artwork from external artists and partners. The platform will not require the use of cryptocurrency or the connection of a crypto wallet, and the branding deliberately conceals the underlying technology involved.

While numerous Web 3 native projects like BAYC and Azuki have launched their NFTs on platforms, such as OpenSea, X2Y2, and Blur, and thereby utilizing other projects in the ecosystem for their own products, Starbucks has adopted a unique approach. By gradually transitioning their development stack to Web 3 backend through Nifty Gateway and Forum3, Starbucks has opted for a fully third-party-managed solution. Nifty Gateway provides technical support for the marketplace system and third-party-managed wallets, while Forum3, a company founded by Starbucks former Chief Digital Officer, Adam Brotman, provides the Web 3 business logic for such brand loyalty platform. After diving into their technical stack, it appears that there are better alternatives currently available for companies interested in using Web 3 technology for brand loyalty.

Let's take a moment to look at the technical aspects of Starbucks Odyssey. Similar to other NFT projects, Starbucks Odyssey employs the factory design pattern for its smart contracts. Each time a new NFT collection of stamps is launched, a cloned contract is deployed through the contract factory, and the default contract owner is set to the third-party-managed wallet (custodial wallet) which is controlled by Starbucks. However, the majority of users initially engage in off-chain interactions that is first processed by Starbucks’ backend, such as logging in with their email and paying with fiat currency.

Upon completing a ‘Journey’, users receive an NFT ‘Stamp’, with the mapping relationship between user ID and NFT ID stored in a database. When transactions occur within the in-app NFT marketplace, the states update only in the database. As a result, no other transaction records are left on-chain. Users who are familiar with cryptocurrency and are aware of managing private keys may want to transfer their assets from the third-party-managed wallet to personal wallets or other NFT trading platforms. At this stage, the mapping relationship transitions to a wallet address and NFT ID, and all state updates occur on-chain.

During our research into their wallet and contract address, it is surprising to find that nearly all users have never left any on-chain records. Let us check the latest purchasable NFT collection ‘The Siren Collection Stamp’. As of May 19th, 2023, the total number of tokens found on Polygonscan is 197, compared to the total edition of 2000. For their earlier collection ‘Heritage Journey Stamp’, the total number of tokens indexed by Polygonscan is 108 out of 5000. Despite having built a complete solution for transferring from third-party-managed wallets to private wallets, their business logic, in fact, never encourages users to transfer, but instead encourages them to stay in their comfort zone. The mass adoption of third-party-managed wallets raises questions about the decentralization and safety of such service. Furthermore, it is worth questioning why Starbucks has chosen this particular approach for their Web 3 journey.

We suspect two primary reasons behind Starbucks’ chosen strategy.

First, the lack of Web 3 education among consumers, particularly for a brand like Starbucks, which has a diverse user base. Not everyone wants the troublesome experience of managing their own private keys and/or having to use MetaMask to sign every on-chain transaction. Users have become accustomed to the seamless login experience provided by Google and Apple logins and the ease of payment experience provided by Mastercard and PayPal. Since authentication and payment rely on traditional system, it is more convenient to store users’ assets in a database. However, the success of this off-chain system relies on Starbucks’ established reputation as well as users' trust in Starbucks, something that is not be easily achievable for small and medium businesses interested in providing a similar offering due to the frequency of fraud and scams in the crypto space.

The second reason Starbucks still relies on traditional methods is due to the fact that the Polygon network is not sufficiently robust to handle all of Starbucks’ transactions in terms of transactions per second (TPS). Currently, the block explorer shows Polygon’s Proof-of-Stake (PoS) chain has a TPS of around 35, meaning transactions could take minutes to be verified. While this is an improvement compared to the Ethereum mainnet with its faster verification time and cheaper gas fee, it is still not sufficient enough to handle the high volume of transactions in retail or gaming markets. In practice, only a verification time of seconds or even less than a second can provide a seamless user experience; otherwise, the system may appear outdated and plagued with issues reminiscent of products from earlier decades.

Considering the aforementioned reasons, newly introduced scaling solutions such as Reddio StarkEx can effectively address these challenges.

What is StarkEx? StarkEx utilizes STARK technology to facilitate scalable, user managed (self-custodial) trading and payment transactions for applications such as DeFi and gaming. Essentially, this scaling solution on Ethereum targets business customers like Starbucks or other brands to provide fast and secure on-chain interactions.

StarkEx offers high throughput and security, making it an effective solution for Web 2 businesses to launch their Web 3 products. In fact, it outperforms other scaling solutions across a range of comprehensive metrics, making it a top choice for businesses looking to transition to Web 3. The technical and UI logic of Starbucks Odyssey aims to keep users’ assets off-chain in a database as much as possible, enabling fast transactions and freeing users from managing their private keys. The same logic can be applied to StarkEx, achieving a similar user experience using products within the StarkEx ecosystem, but with greater security and user managed solution.

Introducing Reddio and Web3Auth: Reddio offers developer-friendly StarkEX (Layer 2 zkRollup) APIs for s App/Game Chain to enable developers to embed Token or NFT (Non-fungible token) into their web, desktop and mobile applications with massive scalability (up to 10k TPS) and zero gas fee for off-chain transactions. Developers can manage their in-app NFT trading systems using a dashboard and integrate on-chain operations into their app with minimal effort through Reddio SDKs. Web3Auth, on the other hand, provides a user managed authentication system that allows users to log in to dApps using familiar methods like Google or Apple logins. Web 2 businesses, regardless of their size or market share, can utilize both Web3Auth for authentication and Reddio SDK for bringing assets on-chain. Integrating Reddio and Web3Auth is a straightforward process; To help developers build NFT logic in your own Apps, we open sourced the NFT marketplace, for more information, kindly refer to our documentations on building your own StarkEx dApp.

In summary, Starbucks and Nifty Gateway have demonstrated how to introduce Web 2 users to the Web 3 world using a third-party-managed approach. However, the integration of StarkEx, Reddio, and Web3Auth provides a more secure and decentralized method for onboarding Web 2 users into the Web 3 ecosystem. As the blockchain industry continues to grow rapidly, adopting these innovative solutions will help businesses stay ahead of the curve and ensure a seamless, secure experience for their users.

About Reddio

Reddio is a technology company that builds infrastructure for the blockchain, to help developers adopt blockchain technologies with the easy-to-use Layer 2 zkRollup APIs for App/Game Chain. Enabling developers to embed Tokens and/or NFTs (Non-Fungible Token) into their web, desktop and mobile applications with massive scalability (up to 10k TPS) and zero gas fee for off-chain transactions. Reddio also offers the fastest way to build Web3 Apps and/or Layer 3 on StarkNet.

Backed by Tiger Cub Fund, Arena Holdings, and Paradigm, Reddio simplifies the complexities of developing for multi-chain interoperability and provides a ready-to-use cloud APIs, with global servers, that developers can interact with to build user-friendly Tokens and/or NFT applications.

About Web3Auth

Web3Auth is a distributed private key management solution.

By abstracting the management of private keys away from the end user, Web3Auth allow users to start making use of blockchain applications using familiar authentication methods like Google or Facebook login. Their goal is to allow any digital identity to be a valid cross-platform identifier, allowing users to bring their digital identities with them to any application on the Internet.